CFA Practice Question
Dividends yield
II. is used to evaluate cash flow adequacy.
III. evaluates profitability.
IV. is a measure of investor confidence in a company.
I. is a measure of the current return to an investor in a stock.
II. is used to evaluate cash flow adequacy.
III. evaluates profitability.
IV. is a measure of investor confidence in a company.
Correct Answer: I only
Dividends yield is a market strength ratio used to measure of the current return to an investor in a stock.
User Contributed Comments 5
| User | Comment |
|---|---|
| jmcarr02 | I would rather say: "dividend yield is a *partial or incomplete* measure of the current return to an investor in a stock". |
| tim2 | I'm not sure IV is that wrong. I recall a year or two back one of the highest yeilding stocks was GM which reflected investor worries that it was f*cked. Which proved justified. |
| rise10 | agreed... |
| Nando1 | tim2: To the point on IV, then this shows that the statement is not correct. |
| joywind | i think when it says current return here it assumes that no capital gain is realized. Therefore, dividend yield is the only component of the current return. |