Saturn Corporation has just declared a 25 percent stock dividend.The stock was selling for $18 before the stock dividend.The stock will pay a quarterly cash dividend of 8 cents per share after the stock dividend.If the 8-cent dividend is maintained over the next year what is the post-stock dividend yield?
A)2.13%
B)2.22%
C)0.56%
D)1.44%

Question

Quizplus · Accepted Answer

Post-dividend price = $18/1.25 = $14.40
Yield = $0.32/$14.40 = 2.22%

Saturn Corporation Has Just Declared a 25 Percent Stock Dividend