Determine the market price of a $50 par value preferred share that pays annual dividends based on a 4 percent dividend rate when the market rate is 5%?

Name: Determine the market price of a $50 par value preferred share that pays annual dividends based on a 4 percent dividend rate when the market rate is 5%?
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Question

Quizplus · Accepted Answer

The market price of a preferred share is calculated by dividing the annual dividend by the market rate. The annual dividend is $50 * 4% = $2. The market price is $2 / 5% = $40.

Determine the Market Price of a $50 Par Value Preferred