Question 1 Not yet answered Marked out of 1000 A preference

Question 1 Not yet answered Marked out of 10.00 A preference share pays a $15 dividend annually. If money is worth 11 % pa, what should an investor consider paying for this stock? Answer Flag question Next page Week 2 T218 (3) pptx FIN201 Week 3 Ann....doc

Solution

Answer:

For example, if the face value of the share = 100

Dividend per share = 15

He needs to have 11% on the value of his money = 11/100

Hence money paid for a share = 15 *100

11

= $136.36 per share.