An Allied Northern preferred stock pays a $3.84 annual dividend. What is the value of the stock to an investor who requires a 9.5 percent return?

Name: An Allied Northern preferred stock pays a $3.84 annual dividend. What is the value of the stock to an investor who requires a 9.5 percent return?
Brand: Quizplus
Rating: 4.9 (60 reviews)

Question

Quizplus · Accepted Answer

The value of the stock is calculated using the dividend discount model for preferred stocks, which is the annual dividend divided by the required rate of return. So, $3.84 / 0.095 = $40.42.

An Allied Northern Preferred Stock Pays a $3