Question

If a $100 par value preferred stock pays an annual dividend of $5 and comparable yields are 10 percent, the price of this preferred stock will be? $100 $50 $25 $75

Answer 1

If a $100 par value preferred stock pays an annual dividend of $5 and comparable yields are 10 percent, the price of this preferred stock will be $50

Preferred stock is a sort of inventory that has traits of each shares and bond. Like bonds, desired stocks make coin payouts, frequently at a higher yield than bonds, whilst presenting higher dividend returns and less threat than not unusual stock.

To calculate the price of preferred stock use the formula (yield = dividend/price) so, price = dividend/yield.

Given: dividend = $5; yield = 10% = 0.1

price = 5 / 0.1 = 50

Therefore the price of preferred stock will be $50

An annual dividend is an every year fee granted to an insurance policyholder, frequently of a permanent existence coverage or lengthy-time period incapacity policy. The dividend amount depends on factors which include income made by means of the insurance enterprise, investment performance, and the amount of cash paid into the policy.

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