An 8% preferred stock closed yesterday at a price of $91.32. The stock closed today at par. What is the current dividend yield?

Question

Quizplus · Accepted Answer

The current dividend yield is calculated by dividing the annual dividend by the current market price. Since the stock closed at par today, its price is $100 (par value). The annual dividend for an 8% preferred stock is 8% of the par value, which is $8 ($100 * 8%). Therefore, the current dividend yield is $8 / $100 = 8%.

An 8% Preferred Stock Closed Yesterday at a Price of $91.32