XYZ pays an annual dividend 0f $6.00. What is the required return if t

QUESTION

XYZ pays an annual dividend 0f $6.00. What is the required return if the market value of the preferred stock:a-$60b-$70c-$80
a) If the market value of the preferred stock is $60 thenRequired return on Preferred stock = Annual dividend per share / Market value of Preferred stock = $6 / $60 = 0.1 or 10%b) If the market value of the preferred stock is $70 thenRequired return on Preferred stock = Annual dividend per share / Market value of

ed stock = $6 / $70 = 0.086 or 8.6%c) If the market value of the preferred stock is $80 thenRequired return on Preferred stock = Annual dividend per share / Market value of Preferred stock = $6 / $80 = 0.075 or 7.5%

ANSWER:

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