Bin Restaurant Corp preferred stock has a market price of $14.50. If i

QUESTION

Bin Restaurant Corp preferred stock has a market price of $14.50. If it has a yearly dividend of $3.50, what is your expected rate of return if you purchase the stock at its market price?Answer41.43%19.45%22.36%24.14%
According to the given information,Annual dividend for preferred stock = $3.50Market price of preferred stock = $14.50The formula for calculating the required return on Preferred stock is Rp = D / Pwhere Rp is the required

urn on preferred stock Rp = $3.50 / $14.50 = 0.2414 or 24.14%Therefore, the required return on Preferred stock is 24.14%The correct option is D) 24.14%

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