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      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 stockтАЩs face value Correct Answer Incorrect Answer
      B The annual dividend paid as a percentage of the stockтАЩs market value Correct Answer Incorrect Answer
      C The annual interest paid to bondholders as a percentage of the companyтАЩs 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 companyтАЩs stock price over a year. Correct Answer Incorrect Answer

      Solution

      The annual dividend paid as a percentage of the stockтАЩs 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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