Alpha's preferred stock currently has a market price equal to $80 per share. If the dividend paid on this stock is $6 per share, what is the required rate of return investors are demanding from Alpha's preferred stock?

Question

Quizplus · Accepted Answer

The required rate of return is calculated by dividing the dividend per share by the market price per share. So, $6 / $80 = 0.075, which is 7.5%.

Alpha's Preferred Stock Currently Has a Market Price Equal to $80