Jimmy Purchased a Stock for $22

question 27

Multiple Choice

Jimmy purchased a stock for $22.22 a share, received a dividend of $.55 a share, and sold the stock after one year for $25.36 a share. What was his dividend yield on this investment?

• A)2.30%
• B)2.38%
• C)2.48%
• D)2.56%
• E)2.65%

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Definitions:

Cash Flows

The complete financial movement into and out of a trade, greatly influencing its operational liquidity.

Crossover Rate

The point at which two or more investment projects have the same net present value or rate of return, used in capital budgeting to compare projects.

Mutually Exclusive

Refers to a situation where the selection of one alternative prevents the selection of any other alternative.

Required Rate

The minimum return an investor expects to achieve on an investment, taking into account its risk.