Question

Stana, Inc., has preferred stock outstanding that sells for $104.04 per share. If the required return is 4.2 percent, what is the annual dividend?
A. $4.37
B. $4.19
C. $4.55
D. $3.93
E. $4.09

Answer 1

Answer:

A. $4.37

Explanation:

The preferred stock pays the dividend at a specific rate which is specified earlier at the time of issuance

The Annual dividend can be calculated using following formula

Preferred Dividend = Price of the share x Required rate of return

Placing the values in the formula

Preferred Dividend = $104.04 x 4.2%

Preferred Dividend = $4.36968

Preferred Dividend = $4.37