A share of preferred stock for Marshall Manufacturing currently sells for $120. It offers the investor a dividend rate of 8%, on a par value of $100. If the investor owns 500 shares, her total annual dividend will equal

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Par value is the basis for the dividend the firm is willing to pay to preferred stockholders. In this case, 8% of $100 is an $8 dividend. The shareholder owns 500 shares. Her total annual dividend = $4,000.

A Share of Preferred Stock for Marshall Manufacturing Currently Sells