Davis Gas & Electric Issued Preferred Stock in 1985 That

question 98

Multiple Choice

Davis Gas & Electric issued preferred stock in 1985 that had a par value of $50. The stock pays a dividend of 7.875%. Assume that shares are currently selling for $62.50. What is the preferred stockholder's expected rate of return? Round to the nearest 0.01%.

• A) 6.30%
• B) 7.88%
• C) 10.25%
• D) 5.02%

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