Alpha issued a 6% preferred stock 15 years ago (par value $100). What is it selling for today if the relevant rate of return is now 9%?

Question

Quizplus · Accepted Answer

The price of a preferred stock can be calculated using the formula: Price = Dividend / Required Rate of Return. Here, the dividend is 6% of the $100 par value, which is $6. The required rate of return is now 9%. So, the price = $6 / 0.09 = $66.67.

Alpha Issued a 6% Preferred Stock 15 Years Ago (Par