Kate owns a stock with a market price of $31 per share. This stock pays a consta

Question

Kate owns a stock with a market price of $31 per share. This stock pays a constant annual dividend of $0.60 per share. If the price of the stock suddenly increases to $36 a share, you would expect the:
I. dividend yield to increase.
II. dividend yield to decrease.
III. capital gains yield to increase.
IV. capital gains yield to decrease.

I only

II only

III only

I and III only

II and IV only

I got this answer wrong, so I'm just trying to figure out the right answer. Can you explain the answer as well? Thank you.

I only

II only

III only

I and III only

II and IV only

I got this answer wrong, so I'm just trying to figure out the right answer. Can you explain the answer as well? Thank you.

Explanation / Answer

The correct answer is only II.

I just did the quiz and I got it right.

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