Question

rant Hillside Homes, Inc., has preferred stock outstanding that pays an annual dividend of $9.80. Its price is $110. What is the required rate of return (yield) on the preferred stock

Answer 1

Answer:

The correct answer is: 8,9%.

Explanation:

The dividend yield is the amount of money a company pays to its stakeholders for owning stocks. The dividend yield is calculated on a yearly basis. The dividend yield is calculated by dividing the annual dividend of the stock with the share price of the asset. Thus, in the example:

Dividend yield = Annual Dividend / Share Price

Dividend yield = $9.8 / $ 110

Dividend yield = 0.089 <> 8,9%