Preferred stock rate of Return

denisxyz · #1 Oct 29, 2008, 08:36 AM

What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 8 percent of par, and a current market price of

(a) $60
(b) $80
(c) $100
(d) $140

manik chand dey · Oct 30, 2008, 12:14 AM

Nominal rate of return(R) is equal to dividend/market price

so in the first case R=0.08*100/60= 13.33%



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