Final answer:
The return on a share of preferred stock, based on the information provided, is 13 percent. This figure is calculated using the formula for dividend yield, which is Annual Dividend per Share divided by Price per Share.
Step-by-step explanation:
To find the return on a share of preferred stock that pays an annual dividend of $3.90 with a market price of $30.00 per share, you would use the formula for dividend yield, which is:
Dividend Yield = Annual Dividend per Share / Price per Share
Substituting the given numbers:
Dividend Yield = $3.90 / $30.00 = 0.13 or 13%
This means the return on the preferred stock is 13 percent, which represents the stock's dividend yield based on the current market price.