What dividend is paid on preferred stock if investors require a 9% rate of return and the stock has a market value of $54.00 per share and a book value of $50.00 per share?

Question

Quizplus · Accepted Answer

9% rate of return is the same as the 9% required dividend yield on preferred stock.

Dividend/Price = 9%

Dividend = Price x 9%

Dividend = $54 x 9% = $4.86

Therefore, the dividend paid on the preferred stock is $4.86 per share. The best choice is D.

What Dividend Is Paid on Preferred Stock If Investors Require