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
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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
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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