Question 3 (2 points)

XYZ, Inc. recently paid a dividend of $1.00 per share which is expected to grow at a constant annual rate of 2% per year. The market price of the company's stock is $20 per share. What is the dividend yield on XYZ stock? Show your answer in percent to one decimal place.

Your Answer:

Question 3 options:

Answer

Question 4 (2 points)

Investors expect a company to announce a 5% decrease in earnings. Instead, the company announces that earnings decreased by 2%.

Question 4 options:

	The stock's price will fall after the announcement because the company had negative earnings
	The stock's price will rise after the announcement because the company's earnings weren't as bad as expected
	The stock's price will not change because it will have already fallen due to expectations of negative earnings, so the announcement will have no affect