National Grit's Preferred Stock Has a Par Value of $100

question 26

Multiple Choice

National Grit's preferred stock has a par value of $100, sells for $85 and pays $11 each year in dividends. What is the required rate of return?

• A) 12.9 %
• B) 11%
• C) 1.29%
• D) 8.5%

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Definitions:

Annuity Payment

A periodic payment received from an annuity investment, typically for retirement income.

Final Payment

the last payment that completes the payoff of a loan or financial obligation.

Compounded Monthly

The method of calculating interest where the earned interest is added to the principal balance each month.

End-of-month Payments

Payments made at the end of each month, often used in billing cycles or loan agreements.