Morris Companies has an issue of preferred stock outstanding that pays a $7.75 dividend every year in perpetuity. What is the required return if this issue currently sells for $68.19 per share?

A. 10.95 percent

B. 11.37 percent

C. 11.86 percent

D. 11.72 percent

E. 11.80 percent

Question

Business

Taniyah Frey

15 October, 20:36

Morris Companies has an issue of preferred stock outstanding that pays a $7.75 dividend every year in perpetuity. What is the required return if this issue currently sells for $68.19 per share?

A. 10.95 percent

B. 11.37 percent

C. 11.86 percent

D. 11.72 percent

E. 11.80 percent

+4

Answers (1)

Know the Answer?

Alonso · Answer 1

Option (B) is correct.

Explanation:

Given that,

Issued preferred stock outstanding that pays dividend per year = $7.75

Current selling price = $68.19 per share

Required return = (Annual dividend : Current price) * 100

= ($7.75 : $68.19) * 100

= 11.37% (Approx)

Therefore, the required return is 11.37% if this issue currently sells for $68.19 per share.

Morris Companies has an issue of preferred stock outstanding that pays a $7.75 dividend every year in perpetuity. What is the required return if this issue currently sells for $68.19 per share?A. 10.95 percentB. 11.37 percentC. 11.86 percentD. 11.72 percentE. 11.80 percent

Morris Companies has an issue of preferred stock outstanding that pays a $7.75 dividend every year in perpetuity. What is the required return if this issue currently sells for $68.19 per share?

A. 10.95 percent

B. 11.37 percent

C. 11.86 percent

D. 11.72 percent

E. 11.80 percent