Question

    What does the term 'dividend yield' signify for an

    investor in the equity market?
    A The annual dividend paid as a percentage of the stock’s face value Correct Answer Incorrect Answer
    B The annual dividend paid as a percentage of the stock’s market value Correct Answer Incorrect Answer
    C The annual interest paid to bondholders as a percentage of the company’s market value Correct Answer Incorrect Answer
    D The rate of return on investment for newly issued shares Correct Answer Incorrect Answer
    E The growth in the company’s stock price over a year. Correct Answer Incorrect Answer

    Solution

    The annual dividend paid as a percentage of the stock’s market price. Dividend yield is a measure of the return on investment provided by way of dividend payouts by a company. It is calculated by dividing the annual dividend paid per share by the current market price of the stock, expressed as a percentage.

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