Question

A preferred stock pays an annual dividend of $5.20. What is one share of this stock worth today if the rate of return is 10.44 percent?

Answer 1

Answer:

$49.81

Explanation:

The stock price of the one share of the preferred stock in the given question  shall be determined through the dividend valuation formula which is given as follow:

Price of share=Dividend  per share/Rate of return

In the given question:

Dividend  per share=$5.20

Rate of return=10.44%

Price of share=5.20/10.44%=$49.81