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Some investors look for stocks that offer dividends. Dividends are payments made to investors for owning shares of stock in a company. The dividend yield
Some investors look for stocks that offer dividends. Dividends are payments made to investors for owning shares of stock in a company. The dividend yield is one way of computing how much an investor can earn in dividends per share of stock that they own. Suppose Maxx's Marvelous Mailing Company's stock is currently valued at $60 per share, and shareholders will earn $5 per share that they own each year. We call this $5 the annual dividend. The dividend yield is therefore computed 5/60 8.33%. Obviously, the dividend, stock's share price, and dividend yield can all change in time; we can therefore think of these quantities as functions of time. If D is the dividend yield, A is the annual dividend, and P is the value of a share of Maxx's Marvelous Mailing Company, then At D(t) = PO) Suppose Maxx's Marvelous Mailing Company announces that they currently anticipate a 2.6% increase in their dividend yield per year. Because of this increase, the dividend payment amount will also increase at a rate of $0.56 per share per year. Use calculus techniques to quantify the rate at which the value of a share of Maxx's Marvelous Mailing Company's stock is changing. Is this a good short-term investment right now? Explain your
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