PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on a perpetual preferred stock with a $100 par v...

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Question

PREFERRED STOCK RATE OF RETURN What will be the nominal rate of return on a perpetual preferred stock with a $100 par value,

Answer 1

Answer #1

Ans Nomimal Rate of Return = Dividend / Price of Share * 10

a) Nominal Rate of Return = ( 100 * 10%) / 53 * 100

= 18.8%

b) Nominal Rate of Return = ( 100 * 10%) / 85 * 100

= 11.8%

c) Nominal Rate of Return = ( 100 * 10%) / 100 * 100

= 10.0%

d) Nominal Rate of Return = ( 100 * 10%) / 142 * 100

= 7.0%

Answer 2

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