The required return on Mountain Brook stock is 13.8 percent and the dividend growth rate is 3.64 percent. The stock is currently selling for \( \$ 32.80 \) a share. What is the dividend yield? a. 11.75 percent b. 13.36 percent c. 8.93 percent d. 10.50 percent e. 10.16 percent

To find the dividend yield, we can use the Gordon Growth Model formula, which relates the required return, dividend growth rate, and stock price. The formula can be rearranged to find the dividend yield: \[ \text{Required Return} = \frac{D_0(1+g)}{P_0} + g \] where \( D_0 \) is the current dividend, \( g \) is the growth rate, and \( P_0 \) is the stock price. Rearranging gives us: \[ \text{Dividend Yield} = \text{Required Return} - g \] Now plug in the values: \[ \text{Dividend Yield} = 0.138 - 0.0364 = 0.1016 \text{ or } 10.16\% \] So, the dividend yield is 10.16 percent, corresponding to option (e). The answer is e. 10.16 percent.