What Dividend Is Paid on Preferred Stock If Investors Require

question 6

Multiple Choice

What dividend is paid on preferred stock if investors require a 9% rate of return and the stock has a market value of $54.00 per share and a book value of $50.00 per share?

• A) $2.92
• B) $4.50
• C) $4.68
• D) $4.86

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Definitions:

Net Income

When revenue totals more than expenses, the result is net income.

Gross Profit

The difference between revenue and the cost of goods sold before accounting for other costs such as selling, administrative, and financial expenses.

Direct Expenses

Costs that can be directly attributed to the production of specific goods or services.

Building Cost

The total expenses involved in constructing a building, including material, labor, and other direct and indirect costs.