NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A company declares a dividend of Rs 6 per share. The stock's current market price is Rs 240. What is its dividend yield?
The dividend yield is 2.5%. Yield is annual dividend per share divided by the current market price, so Rs 6 divided by Rs 240 equals 0.025. It shows the cash income return from holding the stock, excluding any price appreciation.
- A4.0%
- B2.5%Correct
- C6.0%
- D1.5%
Explanation
Dividend yield = Dividend per share / Market price = 6 / 240 = 0.025 = 2.5%. Choosing 4.0% comes from dividing by Rs 150, and 6.0% confuses the rupee dividend with a percentage. Working back: 2.5% of 240 = 6.
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