A share of preference shares pays a quarterly dividend of R2.50.If the price of this preference shares is currently R50, what is the simple annual rate of return?

Question

Quizplus · Accepted Answer

To calculate the simple annual rate of return, we need to use the formula:

Simple Annual Rate of Return = (Dividend per Share / Price per Share) x 4 x 100%

Plugging in the values given:

Simple Annual Rate of Return = (2.50 / 50) x 4 x 100%
= 0.05 x 4 x 100%
= 20%

Therefore, the answer is choice C, which gives a simple annual rate of return of 20%.

A Share of Preference Shares Pays a Quarterly Dividend of R2.50.If