Boyer Corp. has outstanding borrowings. One of these borrowings is nonconvertible preferred stock (cumulative) with a par value of $75 and an annual dividend rate of 8.25%. This preferred stock is currently selling for $56.46 per share. What is the yield or return (r) on this preferred stock?

Question

Quizplus · Accepted Answer

The yield or return can be calculated using the following formula:
r = Annual Dividend / Current Price
r = ($75 x 0.0825) / $56.46
r = $6.1875 / $56.46
r = 0.10959 or 10.959%
Therefore, the answer is C, 10.959%.