Bethesda Water has an issue of preferred stock outstanding with a coupon rate of 6.20 percent...

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Bethesda Water has an issue of preferred stock outstanding with a coupon rate of 6.20 percent...

Bethesda Water has an issue of preferred stock outstanding with a coupon rate of 6.20 percent that sells for $97.26 per share. If the par value is $100, what is the cost of the company's preferred stock?

A) 6.37% B) 6.15% C) 6.91% D) 6.20% E) 6.11%

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Answer 1

Answer #1

The cost of the company's preferred stock = Annual Dividend / Market Price*100

= ( $ 100 * 6.2%) / $ 97.26*100

= 6.37%

Hence the correct answer is A) 6.37%

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Answer 2

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