The value of a $30 par value preferred share that pays annual dividends based on a 6% dividend rate, when the market yield is 6%, is closest to:

Question

Quizplus · Accepted Answer

The value of a preferred share that pays dividends can be calculated using the formula: Dividend per share / Market yield = $30 * 6% / 6% = $30. Since the dividend rate matches the market yield, the value of the share is equal to its par value, which is $30.

The Value of a $30 Par Value Preferred Share That