Question

A share of preferred stock currently sells for $120. it offers the investor a dividend rate of 8%, on a par value of $100. if the investor owns 500 shares, her total annual dividend will equal:

Answer 1

Dividend per share= 8% of 100 = 8
for 500 share its 8 multiply by 500 = 4000
Normally the annual dividend amount is stated as a percentage of the par value, which is the original asking price of the stock


((dividend yields: Yield is the effective interest rate you receive if you buy shares of the preferred stock.
The yield is equal to the annual dividend divided by the current price.
in this case
dividend yield is 8 divided by 120
answer= 0.067= 6.7%))