A Preferred Stock Is Expected to Pay a Constant Quarterly

question 38

Multiple Choice

A preferred stock is expected to pay a constant quarterly dividend of $1.25 per quarter into the future. The required rate of return,Rs,on the preferred stock is 13.5 percent. What is the fair value (or price) of this stock?

• A)$37.04
• B)$24.36
• C)$52.36
• D)$18.65
• E)None of these choices are correct.

---

Definitions:

Google Scholar

A freely accessible web search engine that indexes the full text or metadata of scholarly literature across an array of publishing formats and disciplines.

Databases

Organized collections of data, typically electronically stored, that can be accessed and used for various purposes.

Google Legal Aid

Utilization of the Google search engine to find legal assistance programs, information on laws, or resources for legal help.

Legal Site

A website that provides legal information, resources, services, or support to its users.