(Preferred Stock Valuation) What is the value of a preferred stock where the dividend rate is 16 percent on a $100 par value? The appropriate discount rate for a stock of this risk level is 12 percent. A preferred stock is selling for $55.16 and pays $2.35 in dividends. What is your expected rate of return if you purchase the security at the market price? (Preferred Stockholder Expected Return) You own 250 shares of McCormick Resources preferred stock, which currently sells for $38.50 per share and pays annual dividends of $3.25 per share. What is your expected return? b. If you require an 8 percent return, given the current price, should you sell or buy more stock? a