Which of the following statements regarding the effects of a stock dividend is TRUE?

A) New capital is channeled to the company.

B) Net current assets are decreased.

C) The market value of the stock is decreased.

D) Capital surplus is reduced.

Answer: C) The market value of the stock is decreased.

If GHI currently has earnings of $3 and pays an annual dividend of $1.75 and GHI's market price is $35, the current yield is

A) 1.75%.

B) 3%.

C) 8.6%.

D) 5%

Answer: D) 5%.

A company currently has earnings of $4 and pays a $.50 quarterly dividend. If the market price is $40, what is the current yield?

A) 10%.

B) 15%.

C) 5%.

D) 1%.

Answer: C) 5%.

A company has paid a dividend every quarter for the past 20 years. If the stock's price has fallen dramatically over the past quarter, but the dividend has remained the same, it may be concluded that:

A) dividend yield to maturity has decreased.

B) current dividend yield has increased.

C) current dividend yield has decreased.

D) current dividend yield has remained the same.

Answer: B) current dividend yield has increased.

If a common stock is currently selling for $75 per share with a quarterly dividend of $.75, the current yield for the stock is:

A) 10%.

B) 4%.

C) 1%.

D) 3%.

Answer: B) 4%

GHI stock is at $10 par value and is selling in the market for $60 per share. If the current quarterly dividend is $1, the current yield is:

A) 1%.

B) 1.7%.

C) 10%.

D) 6.7%.

Answer: D) 6.7%.