Start your trial now! First week only $4.99!*arrow_forward*

Question

A preferred stock pays a $4 dividend each quarter. Assuming an investor requires a 12% return on the stock, what is a fair price using the dividend discount model?

Group of answer choices

$33.33

$100.00

$133.33

$533.33

Tagged in

Business

Finance

Find answers to questions asked by students like you.

Q: ABC requires an investment of $50,000 and borrows $20,000 at 6%. If the return on equity is 15%, wha...

A: Total capital required, C = $ 50,000Debt = D = 20,000Hence, equity = E = C - D = 50,000 - 20,000 = 3...

Q: Why do most acquisitions fail to create shareholder value?

A: Mergers and acquisitions generally failed to create or add value for the shareholders because of ove...

Q: Compute the value in 35 years of a $1,500 deposit earning 8 percent per year. (Do not round intermed...

A: We need to use the concept of time value of money to solve the question. According to the concept of...

Q: What annual rate of return is earned on a $5,000 investment when it grows to $9,000 in five years? (...

A: Let r be the annual rate of return, earned on a $5,000 investment when it grows to $9,000 in five ye...

Q: The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates ...

A: Justification:A Certificate Deposit (CD) for two years will have the similar yield as the Certificat...

Q: discuss the rationale behind the introduction of negative interest rate policies across economies wo...

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any spec...

Q: Calculate how much you will have to save each month between now and then to have $300,000 in your re...

A: Calculate the monthly saved amount as follows:

Q: In 2018, Jake's Jamming Music, Inc. announced an ROA of 8.46 percent, ROE of 13.50 percent, and prof...

A: Return on assets and return on equity are also known as profitability ratios. These ratios show the ...

Q: 9. Duration is an important measure of interest rate risk. The duration is the percent the price of ...

A: As per the given information, the percentage change in the bond\'s yield to maturity is 2% (7% - 5%)...