The following information is available for Meyer 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 Meyer 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

Dividend yield is the ratio of annual dividends paid by a company to its shareholders relative to its share price. A 6.0% dividend yield means that Meyer Company pays out 6% of its share price in dividends every year. This information is important for investors seeking to earn revenue on their investments, as they can expect a return of 6% on their investment from dividends alone. Bondholders would not be interested in the dividend yield since they receive interest payments instead. Solvency is not related to dividends, so option D is also incorrect. Therefore, option B is the correct answer.

The Following Information Is Available for Meyer Company: ​

The Following Information Is Available for Meyer Company: