Question

The preferred stock of Marble Comics pays annual dividends of ​$2 in perpetuity​ (starting in one​ year). If you buy a preferred share for ​$22.39 and hold it in​ perpetuity, then what is your annual rate of​ return? Express your answer as a percentage rounded to 2 places. i.e. ​12.3456%equals​12.35%.

Answer 1

Annual rate of return = 08.94%

Step-by-step explanation:

given data

annual Dividend = $2

Price per share of the preferred stock = $22.39

solution

Annual rate of return from the preferred stock that is express as

Annual rate of return = annual Dividend ÷ Price per share of the preferred stock ............1

put here value and we get

Annual rate of return =
`(2)/(22.39)`

Annual rate of return = 0.0894

Annual rate of return = 08.94%