Leflore Corporation has provided the following data: Dividends on common stock during Year 2 totaled $6,000.The market price of common stock at the end of Year 2 was $1.38 per share.The company's dividend yield ratio for Year 2 is closest to:
A)4.3%
B)1.2%
C)35.0%
D)50.0%

Question

Leflore Corporation has provided the following data:  Dividends on common stock during Year 2 totaled $6,000.The market price of common stock at the end of Year 2 was $1.38 per share.The company's dividend yield ratio for Year 2 is closest to:
A)4.3% 
B)1.2% 
C)35.0% 
D)50.0%

Quizplus · Accepted Answer

Dividend yield ratio = Dividends per share* ÷ Market price per share
= $0.06 ÷ $1.38 = 4.3% (rounded)
Number of common shares outstanding = Common stock ÷ Par value
= $500,000 ÷ $5 per share = 100,000 shares
*Dividends per share = Common dividends ÷ Common shares (see above)
= $6,000 ÷ 100,000 shares = $0.06 per share (rounded)

Leflore Corporation Has Provided the Following Data: Dividends on Common