Your firm is considering the issuance of preferred shares for the firs

Your firm is considering the issuance of preferred shares for the first time. The average yield on preferred stock for firms in your industry is 6.50%.

If you wish to issue preferred stock at par with a face value of $50.00 per share, approximately how large would you need to make your annual preferred dividend?
A) $3.00
B) $3.25
C) $6.50
D) There is not enough information to answer this question.

ANSWER

B
Explanation: B) Div = r * Price = .065 * $50.00 = $3.25.