If D₁ = $1.25, g (which is constant) = 4.7%, and P₀ = $26.00, what is the stock's expected dividend yield for the coming year? A) 4.12% B) 4.34% C) 4.57% D) 4.81% E) 5.05%

Question

Quizplus · Accepted Answer

First, we need to calculate the stock price based on the given information: P₀ = (D₁ / (1+g)) + (D₁ * (1+g)) P₀ = ($1.25 / 1.047) + ($1.25 * 1.047) P₀ = $28.13 Next, we can calculate the expected dividend yield: Expected Dividend Yield = (D₁ / P₀) * 100% Expected Dividend Yield = ($1.25 / $28.13) * 100% Expected Dividend Yield = 4.81% Therefore, the answer is D) 4.81%.

If D1 = $1

If D₁ = $1