ABC Corporation paid a dividend of 10 per share on its 100 p

ABC Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock. The market value of the common stock is $80 per share. ABC’s dividend yield is (round to one decimal place):

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Solution

Dividend yield on the common stock = 4/80

Dividend yield on the common stock = 5.00%