“Many companies use stock repurchases to increase earnings per share. For example, supposethat a company is in the following position:Net profit $10 millionNumber of shares before repurchase 1 millionEarnings per share $10Price–earnings ratio 20Share price $200The company now repurchases 200,000 shares at $200 a share. The number of sharesdeclines to 800,000 shares and earnings per share increase to $12.50. Assuming the price–earnings ratio stays at 20, the share price must rise to $250.”Discuss.

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A: Step 1:Answer is  ------->Option C   : Retained Earnings will decrease by $ 384000 and total paid…

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A:

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Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.