Answer:
The company's dividend yield ratio for Year 2 is closest to 0.2%
Explanation:
Dividend Yield Ratio: The dividend yield ratio is a financial ratio which helps to take the decisions regarding how much dividend is paid during a particular year.
It shows a ratio between dividend per share and market price par share.
The formula for computing the dividend yield ratio is equals to
Dividend per share ÷ Market Price per share
Since in the given question, the dividend per share is not given. So, we have to compute the dividend per share. The formula is shown below:
Dividend per share = Common stock dividend ÷ Common stock
= $600 ÷ $60,000
= 0.01 per share
Thus, the dividend per share is 0.01 per share.
Since, in the given question, the common stock is given for two years. But we have to compute for year 2 only. So, the common stock for year 2 is equals to common stock ÷ 2 years which is $120,000 ÷ 2 = $60,000 for each year.
Now, by applying the above formula. We can compute the dividend yield ratio for year 2. The computation is given below:
Dividend Yield Ratio = Dividend per share ÷ Market Price per share
= 0.01 ÷ $4.37
= 0.2%
Thus, the company's dividend yield ratio for Year 2 is closest to 0.2%
