QUESTION 2 The market price of the common stock of Ollinger

QUESTION 2 The market price of the common stock of Ollinger Company dropped from $95 to $72 per share. The dividend paid per share remained unchanged. The company\'s dividend payout ratio would ?be unchanged. O increase O decrease 0 be impossible to determine witout more information.

Solution

The Correct answer is the first option or be unchanged.

Dividend Payout ratio can be defined as the portion of earnings of the company which will be paid to the shareholders in the form of Dividends. The formula of Dividend Payout ratio is given below

Dividend Per Share / Earnings per share