Question
(Preferred stock expected return) You are planning to purchase 100 shares of preferred stock and must choose between Stock A and Stock B. Stock A
(Preferred stock expected return) You are planning to purchase 100 shares of preferred stock and must choose between Stock A and Stock B. Stock A pays an annual dividend of $5.25 and is currently selling for $37. Stock B pays an annual dividend of $5.05 and is selling for $39. If your required return is 13.57 percent, which stock should you choose?
What is the expected return of Stock A? _____%
What is the expected return of Stock B? _____%
You are considering the purchase of 150 shares of preferred stock. Your required return is 12 percent. If the stock is currently selling for $44 and pays a dividend of $6.00, should you purchase the stock?
What is the expected rate of return of the stock? _____%
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