The Dividend Yield Is Computed as the Annual Dividend in Year

question 63

Multiple Choice

The dividend yield is computed as the annual dividend in year t + 1 divided by the:

• A) Annual dividend in year t.
• B) Market value in year t.
• C) Market value in year t + 1.
• D) Average value in year t.
• E) Average value in year t + 1.

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Definitions:

Spot Rates

The current market price at which a particular asset can be bought or sold for immediate delivery and payment.

Fair Value Hedge

A type of hedge that protects against changes in the fair value of an asset, liability, or an unrecognized firm commitment, often due to changes in interest rates or other market variables.

Forward Contract

A financial derivative that represents a customized agreement to buy or sell an asset at a predetermined future date and price.

Spot Rate

The current market price for exchanging one currency for another for immediate delivery.