A preferred stock sells for $63.60 a share and provides a return of 8.40 percent. What is the amount of the dividend per share?

Question

Quizplus · Accepted Answer

To find the dividend per share, we need to use the formula:
Dividend per share = Annual dividend / Number of shares

We are given that the preferred stock provides a return of 8.40 percent. This return is the annual dividend yield. Therefore, we can set up the equation as:

0.0840 = Annual dividend / $63.60

Solving for the annual dividend, we get:
Annual dividend = 0.0840 x $63.60 = $5.34

Therefore, the dividend per share is $5.34. The closest answer choice is C ($5.34), so that is the correct answer.

A Preferred Stock Sells for $63