The Zolo Company just declared that it is increasing its annual dividend from $1.00 per share to $1.25 per share.If the stock price remains constant,then:
A)the capital gains yield will decrease.
B)the capital gains yield will increase.
C)the dividend yield will increase.
D)the dividend yield will also remain constant.
E)neither the capital gains yield nor the dividend yield will change.

Question

Quizplus · Accepted Answer

The dividend yield will increase because the dividend amount (numerator) just increased, while the stock price (denominator) remained constant. The capital gains yield is not affected by the increase in dividend payout, so it will neither increase nor decrease.

The Zolo Company Just Declared That It Is Increasing Its