The preferred stock of the Clarence Radiology Company has a par value of $100 and a $9 dividend rate. You require an 11 percent rate of return on this stock. What is the maximum price you would pay for it? Would you buy it at a market price of $96?© BrainMass Inc. brainmass.com October 10, 2019, 7:35 am ad1c9bdddf
Required rate of return=r=11%
Fair price of ...
Solution briefly depicts the steps to estimate the fair price of a preferred stock in the given case.