Question

The preferred stock of Marble Comics pays annual dividends of ​$2 in perpetuity​ (starting in one​ year). If you buy a preferred share for ​$22.39 and hold it in​ perpetuity, then what is your annual rate of​ return? Express your answer as a percentage rounded to 2 places. i.e. ​12.3456%equals​12.35%.

Answer 1

Answer:

Annual rate of return =  08.94%

Explanation:

given data

annual Dividend = $2

Price per share of the preferred stock   = $22.39

solution

Annual rate of return from the preferred stock that is express as

Annual rate of return = annual Dividend ÷ Price per share of the preferred stock    ............1

put here value and we get

Annual rate of return = $\frac{2}{22.39}$        

Annual rate of return = 0.0894

Annual rate of return =  08.94%