Question

What would be the expected rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 9 p...

What would be the expected rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 9 percent of par, and a current market price of $70?

a.

9.00%

b.

12.86%

c.

12.02%

d.

6.30%

e.

14.19%

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Answer #1

dividend(price-flotation cost Cost of preferred stock 12.86% 9 70

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