A firm's stock has a required return of 10%. The stock's dividend yield is 6%. What is the dividend the firm is expected to pay in one year if the current stock price is $40?

Question

Quizplus · Accepted Answer

The dividend yield is calculated as the annual dividend divided by the current stock price. Given a dividend yield of 6% and a current stock price of $40, the expected dividend in one year is calculated as 0.06 * $40 = $2.40.

A Firm's Stock Has a Required Return of 10