You have just purchased a share of preferred stock for $50.00.The preference shares pay an annual dividend of $5.50 per share forever.What is the rate of return on your investment?
A).055
B).010
C).110
D).220

Question

Quizplus · Accepted Answer

The rate of return on the investment can be calculated as (Annual Dividend/Investment), which in this case is (5.50/50) = 0.11 or 11%. Therefore, the correct choice is C) 0.11 or 11%.

You Have Just Purchased a Share of Preferred Stock for $50.00.The