If a stock pays a quarterly dividend of $1.00 and trades at $100 per share, what is its annual dividend yield?

To determine the annual dividend yield, first, you need to calculate the total annual dividends paid by the stock. Since the stock pays a quarterly dividend of $1.00, the total annual dividends would be:

[ \text{Annual Dividends} = \text{Quarterly Dividend} \times 4 = 1.00 \times 4 = 4.00 ]

Next, the dividend yield is calculated by dividing the annual dividends by the stock price per share and then multiplying by 100 to convert it into a percentage:

[ \text{Dividend Yield (%)} = \left(\frac{\text{Annual Dividends}}{\text{Stock Price per Share}}\right) \times 100 = \left(\frac{4.00}{100}\right) \times 100 = 4% ]

This calculation shows that the correct answer is a 4% dividend yield. Understanding this calculation is key for investors when assessing the income-generating potential of an investment relative to its price. A higher dividend yield can indicate a more attractive investment compared to others, depending on the investor's goals and market conditions.