JUJU's dividend next year is expected to be $5.50. It is trading at $45 and is expected to grow at 4 percent per year. What is JUJU's dividend yield and capital gain?
A) 2.5 percent; 6 percent
B) 12.22 percent; 4 percent
C) 4 percent; 12.22 percent
D) 6 percent; 2.5 percent

Question

Quizplus · Accepted Answer

The dividend yield is calculated as the expected dividend divided by the current price, so $5.50 / $45 = 0.1222 or 12.22%. The capital gain is given as the expected growth rate, which is 4 percent.

JUJU's Dividend Next Year Is Expected to Be $5