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.

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