The preferred stock of Marble Comics currently sells for $31.25 per share. The annual dividend of $2.50 is fixed. Assuming a constant dividend forever, what is the rate of return on this stock?

Question

Quizplus · Accepted Answer

The rate of return on a preferred stock with a fixed dividend is calculated by dividing the annual dividend by the current price per share. Here, $2.50 / $31.25 = 0.08 or 8.0%.

The Preferred Stock of Marble Comics Currently Sells for $31