LTM,IncHas an Issue of Preferred Stock Whose Par Value Is

question 27

Multiple Choice

LTM,Inc.has an issue of preferred stock whose par value is $1,000.The preferred stock pays a 4.5% dividend.If investors require a 5.5% rate of return for these shares,what price should the preferred stock sell for?

• A) $611.11
• B) $508.33
• C) $409.09
• D) $818.18

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Definitions:

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Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved.

Minimum Wage

A legally established lower limit on the wage that employers can pay their workers.

Unemployment

The situation of someone of working age and willing to work being unable to find employment.