McMillen House of Books recently paid a $3 dividend on its preferred stock.Investors require a 6% return on the stock.The stock is currently selling for $45.Is the stock a good buy?

Name: McMillen House of Books recently paid a $3 dividend on its preferred stock.Investors require a 6% return on the stock.The stock is currently selling for $45.Is the stock a good buy?
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The dividend yield is 3/45 = 0.0667, which is equal to the required return of 6%. Therefore, the stock is fairly valued.

McMillen House of Books Recently Paid a $3 Dividend on Its