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Return of Preferred Stock
Sony $4.50 preferred is selling for $65.50. The preferred dividend is nongrowing. What is the required return on Sony preferred stock?
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Investors are willing to pay 65.50 for stock that will return 4.50 each year indefinitely. What ROI (return on investment) does that represent? The "required return" means the ROI which is required by investors, as evidenced by the price they're willing to pay for the stock.
I.e. it's the ROI you'll calculate on this Sony pfd. |
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Sony $4.50 preferred is selling for $65.50. The preferred
Dividend is nongrowing. What is the required return on Sony preferred stock? |
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