The answer is C.
50 bucks is what he will earn the dividend on. Since it is 25% - he gets $12.50 in dividend.
Hence his total earnings are 2 + 12.5.
Reg. ur explaination that dividend is in $'s rather than %, I tend to disagree too. Its a practice to give dollar values, but essentially it is %.
Sorry. You are WRONG. Dividends are always announced in $ per share. This amount is constant regardless of share price (i.e., is a fixed amount) until the board of directors announces another change. Of course, at any given moment in time, you can calculate the dividend YIELD which is in percentage. This is NOT done backwards, i.e., the dividend paid is never dependent on the underlying stock price and paid as a percentage of it.
Former Senior Instructor, Manhattan GMAT and VeritasPrep
Vice President, Midtown NYC Investment Bank, Structured Finance IT
MFE, Haas School of Business, UC Berkeley, Class of 2005
MBA, Anderson School of Management, UCLA, Class of 1993