What is the required return on the preferred shares of TH Incorporated? The price of the...

Question

Question

What is the required return on the preferred shares of TH Incorporated? The price of the TH preferred share is $75, the par value of the share is $85 and the dividend rate is 11%.

a. 13.2%

b. 9.7%

c. 11%

d. 12.5%

business finance

Answer 1

Answer #1

d. 12.5%

Annual dividend = $85 * 0.11 = $9.35

Required return = Annual dividend / Stock price

Required return = $9.35 / $75

Required return = 0.125 or 12.5%

Answer 2

Similar Homework Help Questions

What is the required return on the preferred shares of TH Incorporated? The price of the...

What is the required return on the preferred shares of TH Incorporated? The price of the TH preferred share is $75, the par value of the share is $85 and the dividend rate is 11%. 13.2% 9.7% 11% 12.5%
What is the required rate of return on a preferred stock with a $50 par value,...

What is the required rate of return on a preferred stock with a $50 par value, a stated dividend of 8% of par, and a current market price of (a) $70, (b) $83, (c) $104, and (d) $135 (assume the market is in equilibrium with the required return equal to the expected return)? Round the answers to two decimal places. % % % %
PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on a perpetual...

PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 11% of par, and a current market price of (a) $58.00, (b) $76.00, (c) $97.00, and (d) $145.00? Round your answers to two decimal places. % % % %

Click here to read the eBook: Preferred Stock PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on...

Click here to read the eBook: Preferred Stock PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 11% of par, and a current market price of (a) $61.00, (b) $85.00, (c) $117.00, and (d) $142.00? Round your answers to two decimal places. c. % d.
What will be the nominal rate of return on a perpetual preferred stock with a $100...

What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 12% of par, and a current market price of (a) $57, (b) $85, (c) $117, and (d) $149? Round your answers to two decimal places.
What will be the nominal rate of return on a perpetual preferred stock with a $100...

What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 11% of par, and a current market price of (a) $53.00, (b) $79.00, (c) $115.00, and (d) $147.00? Round your answers to two decimal places. ___ % ____ % ____ % ____%

A share of preferred stock is paying an annual dividend of $5. What is the price...

A share of preferred stock is paying an annual dividend of $5. What is the price of the preferred stock if the required rate of return is 11%? Select one: A. $66.67 B. $45.45 C. $41.67 D. $35.71
2. The valuation of preferred stock The formula for the valuation of a share of preferred...

2. The valuation of preferred stock The formula for the valuation of a share of preferred stock is P0=D/rs. In this equation, the variable D represents the (A.Coupon Payment on the share/ B.Annual dividend paid on the share/ C.Share's current Value). Riley is considering the purchase of 350 shares of the preferred stock of Marston Manufacturing Company. The stock carries a par value of $100 per share and an annual dividend rate of 4.25%. Alternative investments of comparable risk are...
Question 1 1 pts Bayside Corporation has an issue of preferred stock outstanding that has an...

Question 1 1 pts Bayside Corporation has an issue of preferred stock outstanding that has an 9.4% dividend rate on a par value of $75. The stock's market price is $50 and investors require a 12.5% rate of return on this stock. What is the intrinsic value of the preferred stock? $99.73 $37.60 $56.40 $75.00 $50.40 Question 2 1 pts Hamilton Company common stock is currently selling for $60 per share. The stock will pay a dividend of $4.35 next...

PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on a perpetual preferred stock with a $100 par v...

PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 10% of par, and a current market price of (a) $53.00, (b) $85.00, (c) $100.00, and (d) $142.00? Round your answers to two decimal places. a. 18.8 % 11.8 b. C. d. 11.8 0.10 0.70 % % %