Question

Bullish, Inc. has an issue of preferred stock outstanding that pays a $ 8.00 dividend every year, in perpetuity. If this issue currently sells for $ 98.00 per share, what is the required return

Answer 1

The required return is 8.16%

Step-by-step explanation:

The computation of the required return is shown below:

The Required rate of return on preferred stock is

= Dividend per share ÷ Share price

= $8.00 ÷ $98.00

= 8.16%

By dividing the dividend per share from the share price we can get the required return and the same is to be considered

Hence, the required return is 8.16%