Series 7 Exam Question 274: Answer and Explanation

Question: 274

Ferret Enterprises pays a quarterly dividend of $0.25 per share and has an EPS of $2.50. What is the dividend payout ratio?

• A. 10 percent
• B. 40 percent
• C. 57 percent
• D. 100 percent

Correct Answer: B

Explanation:

B. When you're determining the dividend payout ratio, you have to remember that the formula is as follows:

Because this question gives you the quarterly dividend, you need to multiply by 4 to get the annual dividend of $1.00 ($0.25 × 4).