Q:
A registered representative has been following PDQ stock in the market over the past year. He has noticed that the stock’s market price has dropped over the past six months, but that the dividends paid on the stock have remained the same. This would indicate that:

a) The current yield on the stock has gone down
b) It is a utility stock
c) The current yield on the stock has gone up
d) The stock is anti-cyclical

A:

The correct answer is c.
Current yield compares the current price of acquiring the stock to the income from the stock, the dividends. In this case, the income has stayed the same while the price to acquire the stock has dropped. This means that the actual return on a dollar invested has gone up.


RELATED FAQS

  1. Why do some preferred stocks have a higher yield than common stocks?

    Before we answer this question, let's just take a quick review of what a stock's yield is actually measuring.The yield is ...
  2. Just prior to the close of the markets on the final trading day before expiration ...

    The correct answer is d. The investor opened the spread strategy with a net debit of $600. When he/she closes the 40 call ...
  3. What metrics should I evaluate when looking for high-yielding dividend stocks?

    Evaluate high-yield dividend stocks to determine if they are a good investment to produce steady income. Learn what questions ...
  4. Which is more important - dividend yield or total return?

    Learn to distinguish between those times when dividend yield or total return is a more useful performance metric for a company's ...
  5. What is the difference between yield and dividend?

    Learn how to differentiate between dividend yield and dividend return, and see why dividend yield is the more popular rate ...
RELATED TERMS
  1. Indicated Yield

    The dividend yield that a share of stock would return based on ...
  2. Forward Dividend Yield

    An estimation of a year's dividend expressed as a percentage ...
  3. Yield

    The income return on an investment. This refers to the interest ...
  4. Yield On Cost - YOC

    The annual dividend rate of a security divided by the average ...
  5. Income Stock

    An equity security that pays regular, often steadily increasing ...
  6. Running Yield

    The annual income on an investment divided by its current market ...
Hot Definitions
  1. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  2. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  3. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  4. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  5. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
  6. Nonfarm Payroll

    A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
Trading Center