A stock that has a price of $20 per share, earnings per share of $2.00, and a dividend of $1.50 will have

Question

Quizplus · Accepted Answer

To calculate the yield, we divide the amount of the dividend by the stock price:

$1.50 dividend / $20 stock price = 0.075 or 7.5% yield

Option A is incorrect because the PE ratio is calculated by dividing the stock price by the earnings per share, not the dividend.

Option C is incorrect because the dividend yield is 7.5%, not 12%.

Option D is incorrect because the PE ratio is calculated by dividing the stock price by the earnings per share, not the dividend. Additionally, the PE ratio would be 10 (not 1.333) if you divide $20 stock price by $2.00 earnings per share.

A Stock That Has a Price of $20 Per Share