NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A company's share price is Rs 200 and its earnings per share is Rs 16, of which Rs 4 is paid as dividend per share. What is the dividend payout ratio and the dividend yield respectively?
The dividend payout ratio is 25% and the dividend yield is 2%. Payout is dividend per share of Rs 4 divided by EPS of Rs 16, while yield is Rs 4 divided by the Rs 200 price. The 8% figure is the earnings yield.
- A25% and 2%Correct
- B25% and 8%
- C75% and 2%
- D75% and 8%
Explanation
Payout ratio = DPS / EPS = 4 / 16 = 25%. Dividend yield = DPS / price = 4 / 200 = 2%. Using EPS over price (8%) gives the earnings yield, not the dividend yield.
Did you get it right without looking?
One question tells you little. A timed set on Investing in Stocks (NISM XXI-A) shows your real accuracy, how long you take and where you lose marks.
More Investing in Stocks (NISM XXI-A) questions
- A stock has a beta of 1.2, the risk-free rate is 7% and the expected market return is 12%. Using the Capital Asset Pricing Model, what is th…
- Which of the following best describes a bonus issue of shares by a company?
- An investor buys a share at ₹800, receives a dividend of ₹24 during the year and sells it at ₹880 at year end. What is the total holding per…
- An investor buys a share at Rs 200 and receives a dividend of Rs 8 during the year. At year end the share price is Rs 230. What is the total…
- A stock trades at a market price of ₹600 per share and its annual earnings per share (EPS) are ₹30. What is its price-to-earnings (P/E) rati…
- Which of the following best describes a bonus issue of shares?