Miller/Hershey's preferred stock is selling at $54 on the market and pays an annual dividend of $4.20 per share.
a. What is the expected rate of return on the stock?
b. If an investor's required rate of return is 9%, what is the value of the stock for that investor?
c. Considering the investor's required rate of return, does this stock seem to be a desirable investment?

Question

Quizplus · Accepted Answer

The Answer of Miller/Hershey's preferred stock is selling at $54 on the market and pays an annual dividend of $4.20 per share.
a. What is the expected rate of return on the stock?
b. If an investor's required rate of return is 9%, what is the value of the stock for that investor?
c. Considering the investor's required rate of return, does this stock seem to be a desirable investment?

Miller/Hershey's Preferred Stock Is Selling at $54 on the Market