Edison Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock. The market value of the common stock is $80 per share. Edison's dividend yield is a. 5% b. 25% c. 10% d. 20%

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Business

Luke Monroe

14 January, 11:31

Edison Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock. The market value of the common stock is $80 per share. Edison's dividend yield is a. 5% b. 25% c. 10% d. 20%

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Felix Davila · Answer 1

The dividend yield is 5%

Explanation:

The amrket value of common stock is known and the dividend yield on the common stock will be calculated.

The dividend yeild is basically the dividend return that the stock is providing expresses as a percentage of its market price.

Thus, the formula for dividend yield is,

Dividend Yield = Dividend per share / market price per share

The dividend yield on Common stock = 4 / 80 = 0.05 or 5%