Neco 2025 Commerce Question 20

Practice objective / multiple choice question 20 from the 2025 Neco Commerce examination.

Neco 2025 Commerce Objective / Multiple Choice Hard Difficulty
Question 20 NECO • 2025 • COMMERCE • objective

A company's shares currently trade at \(\text{₦}1{,}200\) per share. It is expected to pay a dividend of \(\text{₦}90\) next year, and dividends are projected to grow at a constant rate. Investors require a return of \(12\%\). The company announces a 2‑for‑1 stock split next month. (a) Determine the implied constant growth rate of dividends. (b) Compute the theoretical ex‑split price immediately after the split. (c) Assuming the dividend per share is halved by the split, calculate the dividend yield after the split.

Answer Options

Correct Answer A. (a) 4.5% growth rate; (b) ex‑split price = ₦600; (c) dividend yield after split = 7.5%
B. (a) 4.5% growth rate; (b) ex‑split price = ₦550; (c) dividend yield after split = 8.5%
C. (a) 4.0% growth rate; (b) ex‑split price = ₦580; (c) dividend yield after split = 8.0%
D. (a) 5.0% growth rate; (b) ex‑split price = ₦620; (c) dividend yield after split = 7.0%
Correct Answer
A
Correct Option:
(a) 4.5% growth rate; (b) ex‑split price = ₦600; (c) dividend yield after split = 7.5%

About This Question

This is Neco 2025 Commerce Question 20. It is one of the objective questions from the 2025 Neco Commerce examination.

Difficulty level: Hard .

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