In 2009, Swisten Inc. issued a $150 par value preferred stock that pays an 8% annual dividend. Due to changes in the overall economy and in the company's financial condition investors are now requiring an 15% return. What price would you be willing to pay for a share of the preferred if you receive your first dividend one year from now?
A) $80
B) $75
C) $59
D) $95
E) $110

Question

Quizplus · Accepted Answer

Dividend = .08 ´ $150 = $12 \Price = 12 ¸ 0.15 = $80