Alpha's Preferred Stock Currently Has a Market Price Equal to $80

question 35

Multiple Choice

Alpha's preferred stock currently has a market price equal to $80 per share. If the dividend paid on this stock is $6 per share, what is the required rate of return investors are demanding from Alpha's preferred stock?

• A) 7.5%
• B) 13.3%
• C) 6.0%
• D) $6.00
• E) $13.33

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Definitions:

Incisors

The sharp, chisel-shaped front teeth that are used for cutting food. In humans, there are four incisors in each jaw.

Large Intestine

The large intestine is the final section of the gastrointestinal tract, responsible for water absorption and the formation of feces.

Duodenum

The first section of the small intestine immediately beyond the stomach, where initial digestion of food occurs.

Esophagus

A muscular tube connecting the throat (pharynx) with the stomach; food is pushed through it by peristaltic movements.