Holdup Bank has an issue of preferred stock with a stated dividend of $7 that just...

Question

Question

Holdup Bank has an issue of preferred stock with a stated dividend of $7 that just sold for $87 per share. What is the bank's cost of preferred?

Answer 1

Answer #1

Solution :- Bank's Cost of Preferred = (Stated Dividend / Sales Price ) = $7 / $87 = 0.0805 = 8.05%

Therefore the correct answer is (D)

If there is any doubt please ask in comments

Answer 2

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