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Licemer1 [7]
3 years ago
13

Holdup Bank has an issue of preferred stock with a $6 stated dividend that just sold for $93 per share. What is the bank's cost

of preferred stock
Business
1 answer:
avanturin [10]3 years ago
3 0

Answer:

6.45%

Explanation:

Calculation for bank's cost of preferred stock

Using this formula

Cost of preferred stock = Dividend / Price of Stock * 100

Where,

Dividend $6

Price of Stock 93 per share

Let plug in the formula

Cost of preferred stock =6/93*100

Cost of preferred stock= 0.0645*100

Cost of preferred stock=6.45 %

Therefore the bank's cost of preferred stock will be 6.45%

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