One year ago,Barkley's stock sold for $28 a share.During last year,Barkley's paid $1.23 per share in dividends and saw its stock price increase by 7 percent for the year.Today,the firm announced that it will pay $1.30 per share in dividends this year.What do you know with certainty about the performance of Barkley's stock for this year?
A)The total rate of return will be higher this year than it was last year.
B)The dividend yield for this year will be higher than it was last year.
C)The capital gains yield will be positive.
D)The dividend yield for this year will be lower than it was last year.
E)The total rate of return will be lower this year than it was last year.

Question

Quizplus · Accepted Answer

Dividend yield_{Last year} = $1.23 / $28 = 0.0439,or 4.39% Dividend yield_{This year} = $1.30 / (1.07 × $28)= 0.0434,or 4.34%

One Year Ago,Barkley's Stock Sold for $28 a Share