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mezya [45]
4 years ago
11

Rebello's preferred stock pays a dividend of $1.00 per quarter, and it sells for $55.00 per share. what is its effective annual

Business
1 answer:
Lilit [14]4 years ago
3 0
To solve for the effective annual rate of return:

Effective annual rate of return = (1+(quarterly dividend/preferred stock price))/periods per year)-1
Quarterly dividend = $1.00
Preferred stock price = $55.00
Periods per year = 4
EFF annual rate of return = (1+(1.00/55))/4-1
EFF annual rate of return = 7.47%
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