Smith Energy Corporation has a dividend yield of 5%, and it's stock closed at $100 yesterday. This implies a QUARTERLY dividend of: O $1.25 O $2.50 O $3.75 O $5.00
Smith Energy Corporation has a dividend yield of 5%, and it's stock closed at $100 yesterday. This implies a QUARTERLY dividend of: O $1.25 O $2.50 O $3.75 O $5.00
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![**Question:**
Smith Energy Corporation has a dividend yield of 5%, and its stock closed at $100 yesterday. This implies a QUARTERLY dividend of:
- $1.25
- $2.50
- $3.75
- $5.00
**Explanation:**
To find the quarterly dividend, use the formula:
\[ \text{Annual Dividend} = \text{Dividend Yield} \times \text{Stock Price} \]
Here, the annual dividend is \( 5\% \times 100 = 5 \).
Since this is the annual dividend, the quarterly dividend is:
\[ \frac{5}{4} = 1.25 \]
Thus, the correct answer is $1.25.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F537cca7c-787a-475d-9aba-926e9a602de3%2Fc4bb8219-46b3-4870-a6df-1b1f55da3feb%2Flem5276_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Question:**
Smith Energy Corporation has a dividend yield of 5%, and its stock closed at $100 yesterday. This implies a QUARTERLY dividend of:
- $1.25
- $2.50
- $3.75
- $5.00
**Explanation:**
To find the quarterly dividend, use the formula:
\[ \text{Annual Dividend} = \text{Dividend Yield} \times \text{Stock Price} \]
Here, the annual dividend is \( 5\% \times 100 = 5 \).
Since this is the annual dividend, the quarterly dividend is:
\[ \frac{5}{4} = 1.25 \]
Thus, the correct answer is $1.25.
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