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Suppose that a share of preferred stock pays annual dividends that increase by $4 with each...

Suppose that a share of preferred stock pays annual dividends that increase by $4 with each dividend, and the first dividend is $10. If the price of the stock is $1944.44 and the first dividend comes one year after the stock is purchased, what is the yield rate? Give your answer as an effective rate.

j = %

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Answer #1

Yield rate = dividend / stock price

= 10/1944.44

= 0.51%

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