Rebello's Preferred Stock Pays a Dividend of $1

question 1

Multiple Choice

Rebello's preferred stock pays a dividend of $1.00 per quarter,and it sells for $55.00 per share.What is its effective annual (not nominal) rate of return?

• A)6.62%
• B)6.82%
• C)7.03%
• D)7.25%
• E)7.47%

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Definitions:

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and labor.

Transfer Price

The price at which goods and services are traded between departments or subsidiaries within the same organization.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor, in contrast to fixed costs which remain constant regardless of production level.

Transfer Price

The price charged for goods or services transferred between departments or subsidiaries within the same company.