The Preferred Stock of the Pearson Institute Pays a Constant

question 260

Multiple Choice

The preferred stock of the Pearson Institute pays a constant annual dividend of $3 and sells for $21. You believe the stock will sell for $12 in one year. You must, therefore, believe that the required return on the stock will be ____ % ___________ in one year.

• A) 8; higher
• B) 8; lower
• C) 9; higher
• D) 10; lower
• E) 10; higher

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Definitions:

Warehousing Space

The area allocated for the storage of goods in a building or designated area until they are ready to be shipped or sold.

Enrollment

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