Whistle Corp.has a preferred stock that pays a dividend of $2.40.If you are willing to purchase the stock at $11,what is your required rate of return (round your answer to the nearest .1% and assume that there are no transaction costs)?

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Quizplus · Accepted Answer

The required rate of return is the dividend yield, which is calculated by dividing the annual dividend by the current stock price. In this case, the dividend yield is $2.40/$11 = 0.218, or 21.8%.