Question
Asked Mar 17, 2020
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Preferred stock valuation Farley inc has perpetual preferred stock outstanding that sells for $30 a share and pays a dividend of $2.75 at the end of each year. What is the required rate or return? 

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Expert Answer

Introduction

Current price of a preferred stock, which is not redeemable, reflects the present value of all the future dividends receivable.

Current price can be calculated by dividing the dividends to be received p...

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