The 1.2 million preferred shares of Mighty Machines Ltd.,which pay a dividend rate of 6.5 percent on a stated value of $40,are currently worth $42,000,000.What is the risk premium associated with these preferred shares if the risk-free rate is 4.25 percent?
A) 1.97%
B) 2.25%
C) 2.57%
D) 3.18%
Correct Answer:
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