Value of a Preferred Stock If a preferred stock from Pfizer Inc.(PFE)pays $3.00 in annual dividends,and the required return on the preferred stock is 7 percent,what's the value of the stock?
A)$0.21
B)$0.43
C)$21.00
D)$42.86

Question

Quizplus · Accepted Answer

The value of the preferred stock can be calculated using the formula:

Value of preferred stock = Annual dividend payment / Required rate of return

Plugging in the given values, we can calculate:

Value of preferred stock = $3.00 / 0.07 = $42.86

Therefore, the answer is D) $42.86.

Value of a Preferred Stock If a Preferred Stock from Pfizer