If D0 = $2.25, g (which is constant) = 3.5%, and P0 = $50, what is the stock's expected dividend yield for the coming year?
A) 4.42%
B) 4.66%
C) 4.89%
D) 5.13%
E) 5.39%

Question

Quizplus · Accepted Answer

$\begin{array}{lr}
\mathrm{D}_{0} & \$ 2.25 \
\mathrm{~g} & 3.5 \% \
\mathrm{P}_{0} & \$ 50.00 \
\mathrm{D}_{1}=\mathrm{D}_{0}(1+\mathrm{g})= & \$ 2.329 \
\text { Dividend yield }=\mathrm{D}_{1} / \mathrm{P}_{0}= & 4.66 \%
\end{array}$