A Preferred Stock Will Pay a Dividend of $2

question 19

Multiple Choice

A preferred stock will pay a dividend of $2.75 in the upcoming year,and every year thereafter,i.e.,dividends are not expected to grow.You require a return of 10% on this stock.Use the constant growth DDM to calculate the intrinsic value of this preferred stock.

• A)$0.275
• B)$27.50
• C)$31.82
• D)$56.25
• E)none of the above

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Definitions:

Responsiveness

The ability of a company or system to quickly react to changes in demand, customer preferences, or market conditions, often critical for maintaining high levels of customer satisfaction.

Mean Squared Error

A measure of the average squared difference between the estimated values and what is estimated, often used in statistics and machine learning to assess the accuracy of models.

Coefficient of Correlation

A statistical measure that indicates the extent to which two variables fluctuate together. A higher coefficient suggests a stronger relationship.

Overall Error

Overall Error encompasses the total inaccuracies or deviations from a standard or expected outcome, combining both systematic and random errors.