Question

Shares of common stock of the Samson Co. offer an expected total return of 16.2 percent. The dividend is increasing at a constant 5.6 percent per year. The dividend yield must be:_________

Answer 1

Options:

A. 5.60%.

B. 10.60%.

C. 16.20%.

D. 21.80%.

E. 2.89%.

Answer:D. 21.80%

Explanation:The Dividend yield is the total amount earned by dividing the amount of dividend per share by the stock price per share for a given Company,it generally represented in percentage. The Shares of common stock of the Samson Co. that offers an expected total return of 16.2 percent, and a dividend increase of 5.6% per year will be expected to give a total yield(Which is the total amount earned from this investment during the period under review)

Total yield will be 16.2%+5.6%=21.8%.