Buster Ice Cream has issued preferred stock that pays an annual dividend of $3.00. Suppose that the stock is currently trading for $20 per share and investors required rate of return is 12 percent. Which of the following makes the most economic sense for investors?

Sell any shares they own because the stock is currently underpriced

Sell any shares they own because the stock is currently overpriced

They should be indifferent.

Buy additional shares because the stock is currently overpriced

Buy additional shares because the stock is currently underpriced