The shares of ABC Ltd have a market price of $4 and an annual dividend of 17.5 c

Question

The shares of ABC Ltd have a market price of $4 and an annual dividend of 17.5 cents per share fully franked at the tax rate of 30 per cent. Calculate the dividend yield on the shares of ABC that would be reported in the financial press.

A. 22.85%
B. 4.375%
C. 1.312%
D. Dividends cannot be calculated as not enough information is provided.

The shares of ABC Ltd have a market price of $4 and an annual dividend of 17.5 cents per share fully franked at the tax rate of 30 per cent. Calculate the dividend yield on the shares of ABC that would be reported in the financial press.

Explanation / Answer

Correct option is "B", i.e., 4.375%

The dividend yield of a stock is found by dividing the yearly dividend by the market price of the stock.

The market price is $4. The annual dividend is $0.175.

Therefore,

dividend yield = $0.175/$4 = 4.375%

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