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. 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 ...
  2. 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 ...
  3. 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 ...
  4. Which of the following is not a reason why a company might issue a stock dividend ...

    The correct answer is d. All of these are reasons for a company to issue a stock dividend, remember that this differs from ...
  5. What size of annual dividend yield is typical of companies in the financial services ...

    Learn the importance of calculating the annual dividend yield and how income investors can use it to analyze companies in ...
RELATED TERMS
  1. Yield

    The income return on an investment. This refers to the interest ...
  2. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends ...
  3. Income Stock

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

    The annual income on an investment divided by its current market ...
  5. Indicated Dividend

    The total dividends that would be paid on a share of stock throughout ...
  6. Sucker Yield

    When an investor has essentially risked all of his capital for ...
Hot Definitions
  1. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  2. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  3. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  4. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  5. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  6. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
Trading Center