Century 21 Preferred Shares Have a Par Value of $60

question 7

Multiple Choice

Century 21 preferred shares have a par value of $60 and are selling for $50.What is the required rate of return if the preferred shares pay an annual dividend of 6 percent?

• A)5.00%.
• B)6.00%.
• C)7.2%.
• D)11.11%.

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Definitions:

Business Risk

The potential for financial loss or failure that a business faces due to factors like market fluctuations, competition, and management decisions.

Entrepreneurs

Individuals who organize, operate, and assume the risks for business ventures, acting as the driving force behind innovation and economic growth.

Firm

An organization or business entity that produces and sells goods or services in an attempt to generate profit.

Circular Flow Model

An economic model that depicts how money and goods/services move through the economy in different markets between households and firms.