A Share of a Preferred Stock Pays a Dividend of $0.50

question 66

Multiple Choice

A share of a preferred stock pays a dividend of $0.50 each quarter. If you are willing to pay $20.00 for this preferred stock, what is your simple (not effective) annual rate of return?

• A) 8%
• B) 6%
• C) 12%
• D) 14%
• E) 10%

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Definitions:

Devil's Advocate

A role assumed in discussions or arguments to challenge ideas and assumptions by taking an opposing viewpoint, often to clarify or test the strength of the ideas.

Apple Polishing

Informal practice of attempting to gain favor by flattering or trying to please someone.

Groupthink

In a group environment, the need for consensus or conformity creates a psychological effect that results in poor or illogical decisions.

Outside Experts

Specialists or professionals from outside an organization who are hired to provide insight, advice, or services in their area of expertise.