Dexter International is expected to pay a dividend next year of $2.10 per share. Dexter has a beta of 1.00 and the market rate of return is 12% and the risk free rate is 3%. What is the dividend yield if an investor purchases the stock at $41.68 a share? Group of answer choices5.0%6.0%9.0%12.0%

Question
Asked Nov 3, 2019
Dexter International is expected to pay a dividend next year of $2.10 per share. Dexter has a beta of 1.00 and the market rate of return is 12% and the risk free rate is 3%. What is the dividend yield if an investor purchases the stock at $41.68 a share?
 
Group of answer choices
5.0%
6.0%
9.0%
12.0%
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Expert Answer

Step 1

Calculation of dividend yield:

Answer:

Dividend yield is 5.0%

Meaning:

Dividend yield is shown as a percentage and determined by multiplying the dollar value of dividends paid in a given year by one share’s dollar value.

Step 2

Calculation of required rate of...

R R,+Rm-R, )B
=3%+ (12%-3%)x1
-12%
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R R,+Rm-R, )B =3%+ (12%-3%)x1 -12%

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