The stock is priced at $62.5.
The formula below can be used to compute this:
P = d /r ……………………………………… (1)
Where;
P = price of the stock = ?
$5 is the preferred stock dividend, or d.
8%, or 0.08, is the required rate of return.
When we enter the values into equation (1), we get:
P = $5.00 / 0.08
P = $62.5
Consequently, the stock's price is $62.5.
<h3>How would you describe stock?</h3>
A stock is a specific kind of financial instrument that represents the holder's ownership interest in the issuing business and is often exchanged on stock exchanges. Corporations issue shares to raise funds to operate their enterprises. The ordinary and preferred stock categories are the two main stock types.
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