Fred just paid $124.01 for a share of preferred stock that pays $10.23 per year in dividends. The stock has no expiration date. What rate of return is Fred earning on this investment? Show your answer in decimal form to four places (e.g., 12.34% would be entered as 0.1234)

Fred just paid $124.01 for a share of preferred stock that pays $10.23 per year in dividends. The stock has no expiration date. What rate of return is Fred earning on this investment? Show your answer in decimal form to four places (e.g., 12.34% would be entered as 0.1234)

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter7: Stocks (equity) - Characterstics And Valuation

Section: Chapter Questions

Problem 2PROB

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Question

Fred just paid $124.01 for a share of preferred
stock that pays $10.23 per year in dividends.
The stock has no expiration date.
What rate of return is Fred earning on this
investment? Show your answer in decimal form
to four places (e.g., 12.34% would be entered
as 0.1234)

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