Question

Sixth Fourth Bank has an issue of preferred stock with a $6.30 stated dividend that just sold for $125 per share. What is the bank’s cost of preferred stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

5.04%

Step-by-step explanation:

The stated dividend of sixth fourth bank is $6.30

It is sold at $125 per share

Therefore the bank's cost of preferred stock can be calculated as follows

= 6.30/125

= 0.0504 × 100

= 5.04%