What Is the Value of a Preferred Stock That Pays

question 55

Multiple Choice

What is the value of a preferred stock that pays a $4.50 dividend to an investor with a required rate of return of 10%?

• A) $22.22
• B) $27.83
• C) $45
• D) $55.50

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Definitions:

Kanban

The Japanese word for card, which has come to mean “signal”; a kanban system moves parts through production via a “pull” from a signal.

Safety Stock

Additional inventory maintained to mitigate the risk of stockouts due to uncertainties in demand or supply chain disruptions.

Lead Time

The amount of time that passes from the start of a process until its completion, often used in manufacturing and project planning.

Level Schedules

Production planning method that maintains a consistent output rate or workforce level, avoiding fluctuations in response to changing demand.