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stock Companies that have preferred stock outstanding promise to pay a stated dividend for an infinite penod. Prefenred stock is treated thal a perpefumy f
stock Companies that have preferred stock outstanding promise to pay a stated dividend for an infinite penod. Prefenred stock is treated thal a perpefumy f the payments last forever, Preferred stocks are considered to be a hybrid of a common stock and a bend, For example, one of the major difenence between preferred shares and bonds is that the issumg companies can suspend the payment of their preferred dividends without throwing the company into bankruptcy. However, simiar to bonds, preferred stockholders receive a foced payment-their dividend-before the company's residual eamings are paid eot to ifs common stockholders and, as with common stock, preferred stockholders can benefit from an apprecia tien in the value of the firm stock seciritik. Consider the folowing case of Welington Industries: Welington Industnes pays an annual dividend rate of 10.20% on its preferred stock that currently retuths 13.67% and has a par value of $100.00 per share. What is the value of Welington's preferred stock? $100.00 per share $74.62 per share $89,54 per share $11192 per share
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