Answer:
The price of the stock is $75 rounded to the nearest dollar
Explanation:
The question here demands to know the value of Marston preferred stock. This can be evaluated mathematically as follows:
In the question, we identify the following values:
The annual dividend rate on preferred stock = 10%
Return on preferred stock = 13.4%
The Par value = $100 per share.
Mathematically:
Return on preferred stock = Annual dividend rate on preferred stock divided by Price of stock
Hence, price of stock = 10% of $100/0.1340 = 10/0.1340 = $74.63
This is $75 rounded to the nearest dollar
