If a $100 Par Value Preferred Stock Pays an Annual

question 19

Multiple Choice

If a $100 par value preferred stock pays an annual dividend of $5 and comparable yields are 10 percent, the price of this preferred stock will be

• A)$100
• B)$75
• C)$50
• D)$25

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Definitions:

Tax Expense

The sum of the current tax and deferred tax charged to an entity's profit or loss for the period.

Preference Dividends

Dividends that are paid to holders of preferred shares, typically at a fixed rate, before any dividends are paid to common shareholders.

EPS

Earnings Per Share, a financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Directors' Declaration

A statement by the company's directors asserting the accuracy of the financial statements.