A Share of Preferred Stock Pays a Dividend of $0

question 34

Multiple Choice

A share of preferred stock pays a dividend of $0.50 each quarter. If you are willing to pay $20.00 for this preferred stock, what is your nominal (not effective) annual rate of return?

• A) 10%
• B) 8%
• C) 6%
• D) 12%
• E) 14%

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Definitions:

Reflexive

A property of binary relations where every element is related to itself; often discussed in mathematics and logic.

Transitive

A property in logic and mathematics where if relation A relates to B and B relates to C, then A must relate to C.

Utility Function

A utility function is an economic model that relates the satisfaction or utility a consumer derives from consuming specific quantities of goods and services.

Whisky Consumption

It refers to the amount of whisky that is consumed over a given period of time, indicating the demand for this specific alcoholic beverage.