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A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share. The market value of the stock is $16 per share. The company's dividend yield is

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Answer:

The correct answer is 2.5%.

Explanation:

A company has 25,000 shares.

The par value of the common stock is $5.

The market value of the stock is $16 per share.

The dividend paid is $0.4/share.

The company's dividend yield is

= [tex]\frac{Dividend\ per\ share}{Market\ value\ per\ share}[/tex]

= [tex]\frac{0.4}{16}[/tex]

= 0.025

So, the company's dividend yield is 2.5%.