Preferred stock with a $100 par value and a 6 percent dividend is currently trading on the market at $110 per share. What is the amount of the dividend the holder is entitled to receive each year?
A) $66
B) 6 percent of $110
C) $6 percent of the total book value of preferred shares
D) $6
E) $0

Question

Quizplus · Accepted Answer

The holder is entitled to receive a 6% dividend on the par value of the stock, which is $100. Therefore, the annual dividend is 6% of $100, or $6 per share.

Preferred Stock with a $100 Par Value and a 6