ABC Ltd. is expected to pay a total gross dividend of 40c per ordinary share in respect of its 2020 financial year. If the company's current share price is €9.70, what is the share's prospective gross dividend yield?

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Prepare for the Qualified Financial Adviser Exam 2 with flashcards and multiple choice questions, complete with hints and explanations. Get exam-ready and increase your confidence with our comprehensive study materials!

Multiple Choice

ABC Ltd. is expected to pay a total gross dividend of 40c per ordinary share in respect of its 2020 financial year. If the company's current share price is €9.70, what is the share's prospective gross dividend yield?

Explanation:
Dividend yield measures the return you get from dividends relative to the share price. It’s calculated as the annual per-share dividend divided by the current price, shown as a percentage. Here, the annual gross dividend is €0.40 per share and the price is €9.70. Yield = 0.40 / 9.70 ≈ 0.04124, which is about 4.12%. So the prospective gross dividend yield is 4.12%.

Dividend yield measures the return you get from dividends relative to the share price. It’s calculated as the annual per-share dividend divided by the current price, shown as a percentage.

Here, the annual gross dividend is €0.40 per share and the price is €9.70. Yield = 0.40 / 9.70 ≈ 0.04124, which is about 4.12%. So the prospective gross dividend yield is 4.12%.

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