CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 69 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 69
Topic #: 1

The dividend yield of ST hasfallen in theyear to 31 May 20X5, compared to the previous year.

The share price on 31 May 20X4 was $4.50 and on 31 May 20X5 was $4.00. There were no issues of share capital during the year.

Whichof the following should explain the reduction in the dividend yield for the year to 31 May 20X5 compared to the previous year?

AThe dividend paid in the year was reduced in order to pay for new assets.

BSurplus cash was used to pay a special dividend in additionto the normal dividend in the year.

CThe profit for the year fell significantly and the dividend per share stayed the same.

DTo compensate investors for thereduction in share price a higher dividend per share was paid.

Show Suggested Answer

Suggested Answer: D

by Eun at Apr 22, 2023, 06:30 PM

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Sueann

6 days ago

I was tempted to go with option D, but the information provided clearly indicates that the share price fell, so a higher dividend per share is unlikely to be the reason.

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The correct answer is C) The profit for the year fell significantly and the dividend per share stayed the same. The lower share price and no change in dividend per share would naturally result in a lower dividend yield.

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Kenneth

22 days ago

But wouldn't a special dividend increase the dividend yield?

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Rutha

25 days ago

I disagree, I believe it's B.

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Kenneth

26 days ago

I think the answer is C.

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CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 69 Discussion

Contribute your Thoughts:

Sueann

Cecilia

Kenneth

Rutha

Kenneth