The following information is available for Dorman Company: Which of the following statements is correct?
A) The dividend yield is 8.0%, which is of interest to investors seeking an increase in market price of their stocks.
B) The dividend yield is 8.0%, which is of special interest to investors seeking to earn revenue on their investments.
C) The dividend yield is 12.5%, which is of interest to bondholders.
D) The dividend yield is 12.5% 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 8.0%, which is of interest to investors seeking an increase in market price of their stocks. 
B) The dividend yield is 8.0%, which is of special interest to investors seeking to earn revenue on their investments. 
C) The dividend yield is 12.5%, which is of interest to bondholders. 
D) The dividend yield is 12.5% which is an important measure of solvency.

Quizplus · Accepted Answer

The information given states the dividend yield, which is the annual dividend payment divided by the current stock price, is 8%. This is of special interest to investors seeking to earn revenue on their investments as they will receive 8% return on their investment in the form of dividends. Bondholders would not be interested in the dividend yield as they do not receive dividends, and solvency cannot be determined from this information alone.

The Following Information Is Available for Dorman Company: Which