Hurst Company has 20,000 shares of common stock outstanding. These shares were o

Question

Hurst Company has 20,000 shares of common stock outstanding. These shares were originally issued at a price of $15 per share. The current book value is $25.00 per share and the current market value is $30.00 per share. The dividends on common stock for the year totaled $45,000. The dividend yield ratio is: A: 9% B: 7.5% C: 15% D: 10% Hurst Company has 20,000 shares of common stock outstanding. These shares were originally issued at a price of $15 per share. The current book value is $25.00 per share and the current market value is $30.00 per share. The dividends on common stock for the year totaled $45,000. The dividend yield ratio is: A: 9% B: 7.5% C: 15% D: 10% A: 9% B: 7.5% C: 15% D: 10%

Explanation / Answer

Dividend Per Share = Total Dividend Paid / Common stock outstanding = 45000 / 20000 = $2.25 per share

Dividend Yield = Dividend Per Share / Current market value*100 = 2.25/30*100 = 7.5% Option B.

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