krisdross92 krisdross92

16-08-2020
Mathematics

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A preferred stock pays an annual dividend of $6.75 and sells for $58.60 a share. What is the rate of return on this security?

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Tundexi Tundexi

16-08-2020

Answer:

11.52%

Step-by-step explanation:

Price (p0) = 58.6

Dividend (D1) = 6.75

P0= D1/ke

58.6 = 6.75/ke

ke = 6.75/58.6

ke = 0.1152 or 11.52%

Rate of return (ke) = 11.52%

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