n NISM Certifications
XV NISM Series XV
Medium

A company declares a 60% dividend on a Rs 5 face value share, with a 50% payout ratio. If the market price is Rs 180, calculate the Earning Yield.

Practice question from NISM XV Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    5%

  2. B

    4.5%

  3. 3.3%

    Correct answer

  4. D

    2.75%

Why this is the answer

Dividend = 60% of 5 = Rs 3. EPS = Dividend ÷ Payout = 3 ÷ 0.5 = Rs 6. Earning Yield = EPS ÷ Market Price = 6 ÷ 180 = 0.033 = 3.3%.

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