An investor earns dividends of $360.27 during the course of the year.At the end of the year, the stock is worth $10,700.If the dividend yield on the stock over the year was calculated at 4%, the approximate worth of the stock at the beginning of the year was

Question

Quizplus · Accepted Answer

The dividend yield is calculated by dividing the annual dividend by the beginning-of-year stock price. So, if the dividend yield is 4% and the annual dividend is $360.27, the beginning-of-year stock price must have been $360.27 / 0.04 = $9,007.

An Investor Earns Dividends of $360