Question

You bought a share of 5.8 percent preferred stock for $93.68 last year. the market price for your stock is now $96.42. what is your total return for last year? assume a par value of $100.

Answer 1

The total return for the preferred stock over the last year is calculated by adding the annual dividend of $5.80 to the capital gain of $2.74, resulting in a total return of $8.54 per share.

Step-by-step explanation:

The total return on the purchase of preferred stock includes dividends received and any capital gain (or loss) realized upon selling the stock.

To calculate the total return, we must consider the annual dividend and the change in the market price of the stock.

Given that the preferred stock has a dividend rate of 5.8 percent and a par value of $100, the annual dividend is $5.80 per share (5.8% of $100).

If you bought the share for $93.68 and it is now $96.42, the capital gain is $96.42 - $93.68 = $2.74.

Therefore, the total return for the year is the sum of the dividend received and the capital gain, which is $5.80 + $2.74 = $8.54.