Asked by Shannon Powell on Apr 27, 2024
Verified
You have just looked up the stock quotation for Premier Images, Inc. in the Wall Street Journal . The PE ratio is listed as 20. The dividend is shown as $1.00, and the stock just closed (last) at $42.00. What are the yield % and the earnings per share (EPS) for Premier Images, Inc.?
A) Yield = 2.4%; EPS = $2.10
B) Yield = 2.4%; EPS = $5.00
C) Yield = 2.4%; EPS = $20.00
D) Yield = 5.0%; EPS = $2.10
E) Yield = 5.0%; EPS = $5.00
Dividend
A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional shares.
PE Ratio
Price-to-Earnings Ratio; a valuation measure for a company comparing its current share price to its per-share earnings.
Yield %
The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or value.
- Identify the factors affecting bond yields and stock valuations.
Verified Answer
SA
Sarah AlundayApr 28, 2024
Final Answer :
A
Explanation :
To calculate the yield %, we divide the annual dividend by the current stock price and multiply by 100. So, the yield % for Premier Images, Inc. is:
Yield % = (Annual Dividend/Current Stock Price) x 100
Yield % = ($1.00/$42.00) x 100
Yield % = 2.38% or 2.4% (rounded off)
To calculate the earnings per share (EPS), we divide the current stock price by the PE ratio. So, the EPS for Premier Images, Inc. is:
EPS = Current Stock Price/PE Ratio
EPS = $42.00/20
EPS = $2.10
Therefore, the answer is A) Yield = 2.4%; EPS = $2.10.
Yield % = (Annual Dividend/Current Stock Price) x 100
Yield % = ($1.00/$42.00) x 100
Yield % = 2.38% or 2.4% (rounded off)
To calculate the earnings per share (EPS), we divide the current stock price by the PE ratio. So, the EPS for Premier Images, Inc. is:
EPS = Current Stock Price/PE Ratio
EPS = $42.00/20
EPS = $2.10
Therefore, the answer is A) Yield = 2.4%; EPS = $2.10.
Learning Objectives
- Identify the factors affecting bond yields and stock valuations.