You plan to pay $50 for a share of preferred stock that pays a $2.40 dividend per year forever.What annual rate of return will you realize?

Name: You plan to pay $50 for a share of preferred stock that pays a $2.40 dividend per year forever.What annual rate of return will you realize?
Brand: Quizplus
Rating: 4.9 (44 reviews)

Question

Quizplus · Accepted Answer

To calculate the annual rate of return, we divide the annual dividend by the price of the stock. $2.40/$50 = 0.048 or 4.8%. Therefore, the correct answer is C) 4.80%.

You Plan to Pay $50 for a Share of Preferred