Pluto, Inc

question 62

Multiple Choice

Pluto, Inc., has an issue of preferred stock outstanding that pays a $4.50 dividend every year, in perpetuity. If this issue currently sells for $82.30 per share, what is the required return?

• A) 5.47 percent
• B) 6.89 percent
• C) 7.70 percent
• D) 8.23 percent
• E) 8.98 percent

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Definitions:

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to standardize legislation across the states.

Course of Performance

The conduct between contracting parties that establishes a pattern of behavior, which can influence the interpretation of their contract's terms and obligations.

Substantially Impaired

Significantly reduced in ability or function, often referring to a state of physical or mental incapacity that affects one's legal rights or responsibilities.

Risk Passes

A term used in sales and contract law signifying the point at which the risk of loss or damage to goods transfers from the seller to the buyer.