If 1,000 preferred shares with a benchmark value of $50/share, a dividend rate of 10% and redeemable for $80/share, are sold for $75/share, how much dividend may the preferred equity holders expect to receive?
A)$3,000
B)$5,000
C)$7,500
D)$8,000

Question

Quizplus · Accepted Answer

The dividend expected can be calculated as follows: 1,000 shares * $50 (benchmark value per share) * 10% (dividend rate) = $5,000. The sale price or redemption value does not affect the dividend calculation, which is based on the benchmark value and the dividend rate.

If 1,000 Preferred Shares with a Benchmark Value of $50/share