A share of preferred stock pays dividends of $12 per year.What is the value to you if you require a 9.5% rate of return?

Name: A share of preferred stock pays dividends of $12 per year.What is the value to you if you require a 9.5% rate of return?
Brand: Quizplus
Rating: 4.9 (53 reviews)

Question

Quizplus · Accepted Answer

The value of a preferred stock is calculated by dividing its dividend by the required rate of return. In this case, we have:

Value = Dividend / Required rate of return
Value = $12 / 0.095
Value = $126.32

Therefore, the best choice is C: $126.32.

A Share of Preferred Stock Pays Dividends of $12 Per