The Dividend Yield Is Defined as the Annual Dividend Expressed

question 39

Multiple Choice

The dividend yield is defined as the annual dividend expressed as a percentage of the:

• A)average stock price.
• B)initial stock price.
• C)ending stock price.
• D)total annual return.
• E)capital gain.

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Definitions:

Return On Capital Employed (ROCE)

A financial ratio that measures a company's profitability and efficiency in using its capital; calculated as EBIT (Earnings Before Interest and Taxes) divided by capital employed.

Capital Structure

The composition of a company's liabilities and shareholders' equity including debt, equity, and any other types of financing.

Tax Bracket

A range of income over which the tax rate is constant.

Modigliani-Miller Model

A theory on capital structure that suggests that under certain market conditions (no taxes, no transaction costs), the value of a firm is unaffected by how it is financed.