Pearland Company Has 5,000 Shares of Preferred Stock Outstanding

question 45

Multiple Choice

Pearland Company has 5,000 shares of preferred stock outstanding. The preferred stock has a $90 par value, a 5% dividend rate, and is noncumulative. If Pearland has sufficient funds to pay dividends, what is the total amount of dividends that will be paid out to preferred shareholders?

• A)$10,800
• B)$22,500
• C)$9,000
• D)$4,500

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Definitions:

Division A

A specified branch or segment of a company, often focused on a particular type of product or service.

Stock Price

Stock price refers to the current market price of a share of stock, which fluctuates based on supply and demand, investor sentiment, and underlying company performance.

Stock Market Return

Stock market return is the revenue generated by an investment in the stock market over a specific period, which includes dividends received and capital gains realized.

Risk Free Rate

The risk-free rate is the theoretical rate of return of an investment with zero risk, often represented by the yield on government bonds.