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Question 16 Aardvark, Inc. pays a constant annual dividend. At the end of trading on Wednesday,...

Question 16

Aardvark, Inc. pays a constant annual dividend. At the end of trading on Wednesday, the price of its stock was $28. At the end of trading on the following day, the stock price was $27. As a result of the decline in the stock's price, the dividend yield _____ while the capital gains yield _____.

Group of answer choices

decreased; decreased

remained constant; remained constant

decreased; remained constant

increased; remained constant

increased; increased

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Answer #1

Ans increased; remained constant

Aardvark, Inc. pays a constant annual dividend. At the end of trading on Wednesday, the price of its stock was $28. At the end of trading on the following day, the stock price was $27. As a result of the decline in the stock's price, the dividend yield increased; while the capital gains yield remained constant. Capital gain yield is the income due to increase in price of stock whereas dividend yield is the income due to dividend received on the shares.

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