Asked by Louca Kaoulla on May 11, 2024
Verified
The preferred stock of ABC Co. offers a 10.6% rate of return. The stock is currently priced at $80.19 per share. What is the amount of the annual dividend?
A) $6.50
B) $7.00
C) $7.50
D) $8.00
E) $8.50
Preferred Stock
Preferred stock is a type of equity that typically gives its holders preference over common stockholders in terms of dividends and claims on assets in the event of liquidation, but usually does not carry voting rights.
Rate of Return
The financial outcome, whether positive or negative, on an investment over a set duration, highlighted as a percentage of the investment's initial expenditure.
Dividend
Earnings handed out by a corporation to its investors, generally as a profit distribution.
- Understand the concept of dividends and calculate returns on stocks.
Verified Answer
JS
Jobanpreet singhMay 11, 2024
Final Answer :
E
Explanation :
The annual dividend can be calculated by multiplying the rate of return (10.6%) by the current price per share ($80.19). So, the calculation is 0.106 * $80.19 = $8.50.
Learning Objectives
- Understand the concept of dividends and calculate returns on stocks.