A firm has an issue of preferred stock outstanding that has a par value of $100 and a 4% dividend. If the current market price of the preferred stock is $50, the yield on the preferred stock is

Question

Quizplus · Accepted Answer

The yield on the preferred stock is calculated by dividing the annual dividend by the current market price. The annual dividend is 4% of the par value, which is $4. The yield is $4 / $50 = 0.08 or 8.00%.

A Firm Has an Issue of Preferred Stock Outstanding That