Nominal interest rates in Cyprus are 7%, while nominal interest rates in the U.S. are 5%. The spot rate for the Cyprus pound (CY
1 answer:
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Answer:
= 3.72%
Explanation:
We know,
The price of a preferred stock is calculated by dividing the dividends from preferred stock by the required rate of return of preference share. Assuming the stock is growing constantly.
The formula to calculate -
Price of preferred stock = Dividend from preferred stock ÷ required rate of return
Given,
Dividend from preferred stock = $3.35
Price of preferred stock = $90
Therefore,
$90 = $3.35 ÷
or, = $3.35 ÷ $90
or, = 0.0372
Hence, = 3.72%
The required return = 3.72%