Asked by Mike Tyson Bing Bong on Jul 02, 2024
Verified
The preferred stock of ABC Co. offers an 8.4% rate of return. The stock is currently priced at $50.00 per share. What is the amount of the annual dividend?
A) $2.10
B) $4.20
C) $5.00
D) $6.40
E) $8.60
Rate of Return
The rate of return is a measure of the profitability of an investment, calculated as the percentage of the total amount of returned income to the amount of the investment’s initial cost.
Annual Dividend
An annual profit sharing from a corporation to its shareholders, usually in the form of a payment.
- Assess the pecuniary value of cash flows related to investments, loans, and mortgages across time intervals.
- Assess the impact of different interest rates and time horizons on investment returns and loan costs.
Verified Answer
DN
David Naeem7 days ago
Final Answer :
B
Explanation :
The annual dividend is calculated by multiplying the rate of return (8.4%) by the price per share ($50.00). Thus, 0.084 * $50.00 = $4.20.
Learning Objectives
- Assess the pecuniary value of cash flows related to investments, loans, and mortgages across time intervals.
- Assess the impact of different interest rates and time horizons on investment returns and loan costs.