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View Full Version : Preferred stock rate of Return


denisxyz
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%