SIE Exam Question 41: Answer and Explanation

Question: 41

What is the dividend amount that a shareholder who owns 100 shares will receive in the following scenario?

ABC Corporation declared a $0.25 dividend to shareholders of record on Monday, December 5, payable on December 15. The closing price of ABC Corporation stock on December 5 is $20.34.

• A. $0.25
• B. $2.50
• C. $25.00
• D. $250.00

Correct Answer: C

Explanation:

A shareholder who owns 100 shares will receive $25.00 (100 × 0.25). The price of the stock does not affect the dividend payout. Dividends are usually declared quarterly, though some companies may do it annually. A dividend yield would be the sum of the quarterly payouts (e.g. $0.25 × 4 = $1) divided by the current price of the stock (e.g. 1/25.34 = 0.039 = 3.9%).