Purchase Solution

# Return on Preferred Stock

Not what you're looking for?

Preferred Products has issued preferred stock with an \$8 annual dividend that will be paid in perpetuity.
a. If the discount rate is 12 percent, at what price should the preferred sell?
b. At what price should the stock sell 1 year from now?
c. What is the dividend yield, the capital gains yield, and the expected rate of return of the stock?

##### Solution Summary

The solution calculates price of preferred stock now, price 1 year from now, the dividend yield, the capital gains yield, and the expected rate of return of the preferred stock.

##### Solution Preview

Preferred Products has issued preferred stock with an \$8 annual dividend that will be paid in perpetuity.

a. If the discount rate is 12 percent, at what price should the preferred sell?

b. At what price should the stock sell 1 year from now?

c. What is the dividend yield, the capital gains yield, and the expected rate of return of the stock?

Price of Preferred ...

##### Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

##### Motivation

This tests some key elements of major motivation theories.

##### Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

##### Basics of corporate finance

These questions will test you on your knowledge of finance.

##### Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.