A Preferred Stock Will Pay a Dividend of $7

question 62

Multiple Choice

A preferred stock will pay a dividend of $7.50 in the upcoming year and every year thereafter; i.e., dividends are not expected to grow. You require a return of 10% on this stock. Use the constant growth DDM to calculate the intrinsic value of this preferred stock.

• A) $0.75
• B) $7.50
• C) $64.12
• D) $56.25
• E) None of the options are correct.

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Definitions:

Minor Impact

A small or negligible effect or influence that something has on a situation, process, or condition.

Direct Approach

A straightforward method of communication or action where intentions and messages are conveyed clearly and openly.

Negative Message

Communication that conveys a refusal, denial, or unfavorable information to the recipient.

Respectful Close

A polite and considerate way to end a communication, ensuring the recipient feels valued and respected.