Black Eyed Peas, Inc., has an issue of preferred stock outstanding that pays a dividend of $2.50

Question:

Black Eyed Peas, Inc., has an issue of preferred stock outstanding that pays a dividend of $2.50 per quarter in perpetuity. If a dividend was just paid and the preferred stock is currently selling for $78 per share, what is the EAR for this investment?

a. 2.50%

b. 3.21%

c. 12.82%

d. 13.45%

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