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    koolbreezeN's Avatar
    koolbreezeN Posts: 3, Reputation: 1
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    #1

    Jul 27, 2012, 06:25 AM
    FINC question
    An 8 percent stock with a market price of $110 per share and a $100 par value pays a cash dividend of___.
    (Need help with steps on how to work this out)
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #2

    Jul 27, 2012, 09:42 AM
    "8% stock" sometimes means that the stock is currently paying a dividend that's 8% of the current market price, or

    Div = 110 x 0.08

    However, especially concerning preferred stock, that same phrase could mean that it pays a dividend equal to 8% of its par.

    You'll have to consult your textbook (or whatever background material you have, from which the question comes) to see which version of the terminology applies.
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