ABC stock expects to earn $3.00 a share next year and pay a cash dividend of $2.00 a share.If the stock is selling for $20.00 a share,its current return is

Question

Quizplus · Accepted Answer

The current return is the dividend yield, which is calculated as the annual dividend divided by the current stock price.

Dividend yield = Annual dividend / Current stock price

In this case, the annual dividend is $2.00 a share and the current stock price is $20.00 a share, so:

Dividend yield = $2.00 / $20.00 = 0.10 or 10%

Therefore, the answer is B) 10%.

ABC Stock Expects to Earn $3