If a share of preferred stock pays a quarterly dividend of $1.50, has a $40 par value, and is currently selling for $50.00, it is earning an annual return of:

Question

Quizplus · Accepted Answer

The annual dividend is $1.50 per quarter multiplied by 4 quarters, which equals $6.00. The annual return is calculated by dividing the annual dividend by the current price: $6.00 / $50.00 = 0.12 or 12.00%.

If a Share of Preferred Stock Pays a Quarterly Dividend