A preferred stock pays a $4 dividend each quarter. Assuming an investor requires a 12% return...
A preferred stock pays a $4 dividend each quarter. Assuming an investor requires a 12% return on the stock, what is a fair price using the dividend discount model?
Group of answer choices
$33.33
$100.00
$133.33
$533.33
Homework Answers
Fair price using the dividend discount model:-
=(quarterly dividend*4)/rate
=(4*4)/12%
=133.33
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