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    denisxyz's Avatar
    denisxyz Posts: 1, Reputation: 1
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    #1

    Oct 29, 2008, 08:36 AM
    Preferred stock rate of Return
    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's Avatar
    manik chand dey Posts: 63, Reputation: 2
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    #2

    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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