Enter question here...Preferred Products has issued preferred stock with an $7.9
ID: 2365296 • Letter: E
Question
Enter question here...Preferred Products has issued preferred stock with an $7.92 annual dividend that will be paid in perpetuity. a. If the discount rate is 11%, at what price should the preferred sell? Current price $ b. At what price should the stock sell 1 year from now? Future price $ c. What is the dividend yield, the capital gains yield, and the expected rate of return of the stock? (Leave no cells blank - be certain to enter "0" wherever required.) Dividend yield % Capital gains yield % Expected rate of return %Explanation / Answer
a. price of preferred stock = 7.92/11% =$70.18 b. price should the stock sell 1 year = $70.18 c. dividend yield = 7.92/$70.18 = 11% capital gains yield = 0% expected rate of return = 11%
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