A share of preferred stock currently sells for $39 a share. If the dividend is $7...
A share of preferred stock currently sells for $39 a share. If the dividend is $7 per share, what is the required rate of return? Group of answer choices 19.74% 17.95% 13.46% 15.97%
Homework Answers
Answer
Required rate of return = dividend/Current stock price
= $7/$39 = 17.95%
Required rate of return is the minimum return an investor will accept (required) for holding the stock as compensation for risk associated with holding stock.
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