An Issue of Preferred Stock Is Paying an Annual Dividend

question 28

Multiple Choice

An issue of preferred stock is paying an annual dividend of $5. The growth rate for the firm's common stock is 14%. What is the preferred stock price if the required rate of return is 11%?

• A) $45.45
• B) $41.67
• C) $35.71
• D) none of the other answers are correct

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Definitions:

Intangible Property

Assets that do not have a physical presence yet hold value, such as intellectual property, copyrights, patents, and trademarks.

Chose in Action

A personal right to property which can only be claimed or enforced through legal action, not by taking physical possession.

Intellectual Property

Refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce.

Affixed

Affixed means to be attached or securely connected to something else, typically in a permanent or semi-permanent manner.