Current Yield

If a stock pays a dividend of $50 and its market price is $950. What is the current yield of that stock?

Expert Solution

Here,

Annual Dividend = $55

Market Price of Stock = $950

The current yield will be calculated by dividing the annual dividend by its market price.

The terms used in the formula

D - Annual Dividend

P - Market Price

$ \begin{align}\rm\text{Current Yield} &= \frac {D}{P}\\ &= \frac {\$50}{\$950}\\ &= 0.0526 \ or \ 5.26\% \end{align} $

Hence, the current yield of a stock is 5.26%

The Current Yield is 5.26%

Vinay answered 3 years ago

"Current yield" is to _ as "dividend yield" is to _.

"Current yield" is to ___________ as "dividend yield" is to ___________. Bonds; perpetuities Annuity present value; required return Bonds; stocks Stocks; bonds Required return; total return

Demonstrate that you understand the difference among coupon yield, current yield, and yield to maturity with...

Demonstrate that you understand the difference among coupon yield, current yield, and yield to maturity with the following illustration for Morgan Stanley debt, par value of $1000: current price of $1009, coupon rate of 4.1%, issue date of September 15, 2012, settlement date of September 25, 2012, and maturity date of November 1, 2019. To solve for the yield to maturity, please use the yield formula (i.e., “Yield Example”) provided on Blackboard). Please follow it EXACTLY, noting that bond pricing...

4. A) Explain the total return, the current yield, and the capital gains yield for a...

4. A) Explain the total return, the current yield, and the capital gains yield for a bond and how each is determined. B) What is price risk for a bond? What is reinvestment risk for a bond? What bonds would have the most price risk? What bonds would have the least price risk? C) How is default risk measured for a bond? What lets you know a bond is investment grade? What lets you know that a bond is speculative...

The current annualized yield on a 1-year STRIPS is 2.4% and the annualized yield on a...

The current annualized yield on a 1-year STRIPS is 2.4% and the annualized yield on a 2-year STRIPS is 2.6%. According to the expectations theory of interest rates, what will be the annualized yield on a 1-year STRIPS one year from now? What would you expect to pay for this STRIPS with a $1,000 face value?

What are the total return, the current yield, and the capital gains yield for the discount...

What are the total return, the current yield, and the capital gains yield for the discount bond? (Assume the bond is held to maturity and the company does not default on the bond.)

CURRENT YIELD, CAPITAL GAINS YIELD, AND YIELD TO MATURITY Hooper Printing Inc. has bonds outstanding with...

CURRENT YIELD, CAPITAL GAINS YIELD, AND YIELD TO MATURITY Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 8% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond’s market price has fallen to $901 40. The capital gains yield last year was −9 86%. A. What is the yield to maturity? B. For the coming year, what are...

Determine the current yield AND the approximate yield tomaturity for a 6.2%, $800,000 coupon bond...

Determine the current yield AND the approximate yield to maturity for a 6.2%, $800,000 coupon bond selling for $822,400 and maturing in 20 years.

4) The current annualized yield on a 2-year STRIPS is 0.13% and the annualized yield on...

4) The current annualized yield on a 2-year STRIPS is 0.13% and the annualized yield on a 3-year STRIPS is 0.15% (WSJ for week ended 7/31/2020). According to the expectations theory of interest rates, what will be the annualized yield on a 1-year STRIPS two years from now? What would you expect to pay for this STRIPS with a $1,000 face value two year from now? note: no excel or calculator. using formula only 5. Suppose you have a 3.25%...

The yield to maturity: equals both the current yield and the coupon rate for par value...

The yield to maturity: equals both the current yield and the coupon rate for par value bonds. will exceed the coupon rate when the bond is selling at a premium. equals the current yield for all annual coupon bonds. can only be realized if a bond is purchased on the issue date at par value. that is expected will be realized any time a bond is sold.

Describe following for Bonds : coupon rate current yield Yield to maturity Which ones of the...

Describe following for Bonds : coupon rate current yield Yield to maturity Which ones of the above rates/yield can change over the life of the bond and if yes, why? ( 10 points) Research and find a bond for large blue chip company like McDonald, Intel, GE or any other from Dow Jones 30 list. Provide following ( and list source) Bond information : Company, rating Maturity date Current price Coupon rate % Current yield % Yield to Maturity (YTM)...

Question