Find the Current Yield

question 35

Multiple Choice

Find the current yield. Round to the nearest tenth of a percent.
-You invested $6,775 in 125 shares of stock. During the following year, the company paid dividends of $2.25 per share.

• A)2.4%
• B)24.1%
• C)4.2%
• D)0.4%

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Definitions:

Compounded Annually

A method where interest is added to the principal balance once a year, affecting the total interest earned or paid.

Compounded Monthly

A method of calculating interest where interest earned is added to the principal monthly, so each subsequent interest calculation is on an increased amount.

Monthly Compounding

A method of calculating interest whereby the interest is calculated and added to the principal amount at the end of each month.

Compounded Monthly

A term used in finance to describe a situation where interest is added to the principal balance of an investment, loan, etc., on a monthly basis, and future interest is then earned on the resulting new balance.