Question

YCM has outstanding an issue of preferred stock with a par value of $100. It pays an annual dividend equal to 10% of par value. If the required return on YCM preferred stock is 7 %, and if YCM pays its next dividend in one year, what is the market price of the preferred stock today?

Answer 1

Market price of the preferred stock today = $10 / 0.07 = $142.86