A company's perpetual preferred shares pay a semiannual dividend of $3.00. The next dividend will be paid tomorrow.
a) At what price would the shares provide an investor with a 4.5% semiannually compounded rate of return? The investor will receive tomorrow's dividend.
b) If the shares are trading at $70, what nominal rate of return will they provide to a purchaser?

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The Answer of A company's perpetual preferred shares pay a semiannual dividend of $3.00. The next dividend will be paid tomorrow.
a) At what price would the shares provide an investor with a 4.5% semiannually compounded rate of return? The investor will receive tomorrow's dividend.
b) If the shares are trading at $70, what nominal rate of return will they provide to a purchaser?

A Company's Perpetual Preferred Shares Pay a Semiannual Dividend of $3.00