The following information is available for Dorman Company: Which of the following statements is correct?
A) The dividend yield is 6.0%, which is of interest to investors seeking an increase in market price of their stocks.
B) The dividend yield is 6.0%, which is of special interest to investors seeking to earn revenue on their investments.
C) The dividend yield is 16.7%, which is of interest to bondholders.
D) The dividend yield is 16.7% which is an important measure of solvency.

Question

The following information is available for Dorman Company:  Which of the following statements is correct?
A) The dividend yield is 6.0%, which is of interest to investors seeking an increase in market price of their stocks. 
B) The dividend yield is 6.0%, which is of special interest to investors seeking to earn revenue on their investments. 
C) The dividend yield is 16.7%, which is of interest to bondholders. 
D) The dividend yield is 16.7% which is an important measure of solvency.

Quizplus · Accepted Answer

The given information only mentions the dividend yield, which is the percentage of the current annual dividend per share divided by the current market price of the stock. A high dividend yield, such as 16.7%, may indicate that the stock is undervalued, but it is not relevant to bondholders or a measure of solvency. Therefore, the correct choice would be B, as dividend yield is of special interest to investors seeking to earn revenue on their investments.

The Following Information Is Available for Dorman Company: Which