A perpetual preferred stock pays a fixed dividend of $9 and sells for $100. What is the
stock’s rate of return?
A. 6.5 percent
B. 9 percent
C. 11 percent
D. 12.5 percent
I think it's B. 9 percent. $9.00 / 100 = .09
try zenwealth scroll to finance online
To calculate the stock's rate of return, we need to divide the dividend by the stock price and multiply by 100 to convert it into a percentage.
In this case, the perpetual preferred stock pays a fixed dividend of $9 and sells for $100. So the formula to calculate the rate of return would be:
Rate of Return = (Dividend / Stock Price) * 100
Substituting the given values:
Rate of Return = ($9 / $100) * 100
Rate of Return = 0.09 * 100
Rate of Return = 9%
Therefore, the correct answer is B. 9 percent.