A stock has just paid the last dividend at $2.5 per share. Its dividends are anticipated to grow at a constant rate of 6%. Given the stock return is 11%, what is the stock's dividend yield and the capital gains yield for theirst year?Oa, Dividend yield-6.0%; capital gains yield-6.0%Ob. Dividend yield-5.0%; capital gains yield-6.0%Oc Dividend yield=11.0%; capital gains yield-6.0%Od. Dividend yield=5.0%; capital gains yield-5.0%

Given Details:Dividend paid = $ 2.5 per shareGrowth rate = 6%Stock Return = 11%Dividend Yield…

stock has just paid the last dividend at $2.5 per share. Its dividenc st year? a. Dividend yield-6.0%; capital gains yield=6.0% b. Dividend yield-5.0%; capital gains yield=6.0% Dividend yield=11.0%; capital gains yield=6.0% d. Dividend yield-5.0%; capital gains yield=5.0%

stock has just paid the last dividend at $2.5 per share. Its dividenc st year? a. Dividend yield-6.0%; capital gains yield=6.0% b. Dividend yield-5.0%; capital gains yield=6.0% Dividend yield=11.0%; capital gains yield=6.0% d. Dividend yield-5.0%; capital gains yield=5.0%

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 18MC

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Concept explainers

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.

Question

A stock has just paid the last dividend at $2.5 per share. Its dividends are anticipated to grow at a constant rate of 6%. Given the stock return is 11%, what is the stock's dividend yield and the capital gains yield for the
irst year?
Oa, Dividend yield-6.0%; capital gains yield-6.0%
Ob. Dividend yield-5.0%; capital gains yield-6.0%
Oc Dividend yield=11.0%; capital gains yield-6.0%
Od. Dividend yield=5.0%; capital gains yield-5.0%

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