If a preferred stock from Ecology and Environment, Inc. (EEI) pays $2.50 in annual dividends, and the required return on the preferred stock is 5.8 percent, what's the value of the stock?
A) $0.15
B) $0.43
C) $14.50
D) $43.10

Question

Quizplus · Accepted Answer

The value of the preferred stock can be calculated using the formula for valuing preferred stocks: Value = Dividend / Required Return. Plugging in the given values: Value = $2.50 / 0.058 = $43.10.

If a Preferred Stock from Ecology and Environment, Inc