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In dividend yield the formula to use is:d1/p0 right?
So the share price at start of the yr is taken as p0 but here they have taken yr end values?I think you might be confusing dividend yield with cost of equity (or shareholders required rate of return).
The dividend yield is calculated as the dividends for the year as a percentage of the current share price.
So what BPP have done is correct. The dividend during 20X6 is 5c, and the share price (assumed to be at the end of 20X6) is 220c, so the dividend yield is 5/220 x 100%.(Dividend yields are printed in the newspapers to help investors – they are always based on whatever the current share price is, and the latest dividends. They don’t attempt to forecast future dividends.)
Thanks sir 🙂
But when we calculate capital gain and dividend yield,we use a denominator of p0 so isnt that the share price at the start of the yr?
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