Answer (D) is correct . Dividend yield equals dividends per common share divided by the market price per common share. Hence, a drop in the market price of the stock will increase this ratio, holding all else constant.
Answer (A) is incorrect because The return on equity is based on the book value in its calculation rather than the market price of the common stock.
Answer (B) is incorrect because The dividend payout ratio is based on the book value in its calculation rather than the market price of the common stock.
Answer (C) is incorrect because The market-to-book ratio is based on the book value in its calculation rather than the market price of the common stock.
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