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Sunny_sXe [5.5K]
3 years ago
8

A preferred stock that pays an annual dividend of $10, has a par value of $100, and has a required return of 5% will be valued a

t $200. Group of answer choices True False
Business
1 answer:
SCORPION-xisa [38]3 years ago
5 0

Answer:

The answer is true

Explanation:

Vo = D/Kp

Vo is the value of preferred stock/shares

D is the dividend

Kp is the cost of preferred stock/share

To confirm whether the value of stock is actually $200, we perform the following:

D = $10

Kp = 5% or 0.05

10/0.05

=$200.

The answer is true

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Answer:

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