Home Grades Personalized Reviews Discussion al Exam Chapters

Home Grades Personalized Reviews Discussion al Exam- Chapters 7-11, 14,16 me Remaining: 111 minutes ? 1 Back to Assignment Deadline Today at 09:00 PM Lucil Corporation issued perpetual preferred stock with a 9% annual dividend. The stock currently yields 10%, and its par value is $100. What is the stockÄc??s value? 16, ? A.80.00 O B. 100.00 C. 90.00 O D. 85.00 Submit Answer Continue without saving Copyright Notices Terms of UsePrivacy Notice Security Notice Accessibility

Solution

CALCULATION OF THE MARKET VALUE OF THE PREFERRED STOCK Market Value of the preferred stock = Coupon Value / Yield of stock Market value of preferred stock = Preferred Dividend = $                       9.00 (9% of $ 100) Divide By = \"/\" By Yield of Stock 0.1 Market value of preferred stock = $                    90.00 Answer = Option C = $ 90