8-13: Preferred Stock

Problem 8-10

Preferred Stock Rate of Return

What is the required rate of return on a preferred stock with a $50 par value, a stated annual dividend of 10% of par, and a current market price of (a) $62, (b) $76, (c) $101, and (d) $135 (assume the market is in equilibrium with the required return equal to the expected return)? Round the answers to two decimal places.

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