This Question 1 pt 17 of 30 0 complete This Test 30 pts pos

This Question: 1 pt 17 of 30 (0 complete) ? This Test: 30 pts possible * ?Question Help stock pays a dividend of $0.29 annually. The required rate of return is 2%, what is the preferred stock\'s price per share? A share of preferred The preferred stock\'s price per share is s(Round to the nearest cent) 0

Solution

1)

Preferred stock price = Annual dividend / required rate of return

Preferred stock price = 0.29 / 0.02

Preferred stock price = $14.5

2)

Preferred stock price = Annual dividend / required rate of return

98 = 2.36 / required rate of return

required rate of return = 2.36 / 98

required rate of return = 0.02408 or 2.41%