If a stock carried a fix dividend of$6.00 per share, overtime it is now worth 14 percent, what is the original cost of the stock? What would be the current value of this preferred stock? If the yield on the stand & poor preferred stock index declines, how will the price of the preferred stock be affected?
A) What was the original cost of stock
The original cost = Fixed dividend/ original yield
(Assuming to be original yield as 6%)
B) What is the current value of this preferred stock?
The current price= Fixed dividend/ current ...
This provides the steps to calculate the current value of this preferred stock