A share of preferred stock pays an annual dividend of $6 per share. If investors require a 12 percent rate of return, what should be the price of this preferred stock?

Question

Quizplus · Accepted Answer

To find the price of the preferred stock, we can use the formula: Price = Dividend/Rate of Return
Substituting the values: Price = $6/0.12 = $50.00
Therefore, the price of the preferred stock should be $50.00. Choice B is the correct answer.

A Share of Preferred Stock Pays an Annual Dividend of $6