The nominal rate of return on a perpetual preferred stock with current market price of $61. Introduction: Nominal rate of Return: Nominal rate is the rate that is mentioned with the concerned security or financial instrument. It determines the basic cost of finance without any compounding effect. Perpetual Preferred Stock: Perpetual preferred stock is a financial instrument for long term financial assistance required by the companies. A category of preferred stock that doesn’t have a maturity date and is available without any fixed tenure is called perpetual preferred stock.

Question

What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 7% of par, and a current market price of (a) $51, (b) $89, (c) $109, and (d) $137? Round your answers to two decimal places. a % b % c % d %

Answer 1

Question

Chapter 9, Problem 7P

(a)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $61.

Introduction:

Nominal rate of Return: Nominal rate is the rate that is mentioned with the concerned security or financial instrument. It determines the basic cost of finance without any compounding effect.

Perpetual Preferred Stock: Perpetual preferred stock is a financial instrument for long term financial assistance required by the companies. A category of preferred stock that doesn’t have a maturity date and is available without any fixed tenure is called perpetual preferred stock.

(b)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $90.

(c)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $100.

(d)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $138.

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What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 7% of par, and a current market price of (a) $51, (b) $89, (c) $109, and (d) $137? Round your answers to two decimal places. a % b % c % d %

What will be the nominal rate of return on a preferred stock with a $100 par value, a stated dividend of 8 percent of par and a current market price of $80.

What is the required rate of return on a preferred stock with a $50 par value,a stated annual dividend of 7% of par, and a current market price of (a) $30,(b) $40, (c) $50, and (d) $70 (assume the market is in equilibrium with therequired return equal to the expected return)?

Answer 2

Question

Chapter 9, Problem 7P

(a)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $61.

Introduction:

Nominal rate of Return: Nominal rate is the rate that is mentioned with the concerned security or financial instrument. It determines the basic cost of finance without any compounding effect.

Perpetual Preferred Stock: Perpetual preferred stock is a financial instrument for long term financial assistance required by the companies. A category of preferred stock that doesn’t have a maturity date and is available without any fixed tenure is called perpetual preferred stock.

(b)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $90.

(c)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $100.

(d)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $138.

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Answer 3

Question

Chapter 9, Problem 7P

(a)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $61.

Introduction:

Nominal rate of Return: Nominal rate is the rate that is mentioned with the concerned security or financial instrument. It determines the basic cost of finance without any compounding effect.

Perpetual Preferred Stock: Perpetual preferred stock is a financial instrument for long term financial assistance required by the companies. A category of preferred stock that doesn’t have a maturity date and is available without any fixed tenure is called perpetual preferred stock.

(b)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $90.

(c)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $100.

(d)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $138.

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Answer 4

Question

Chapter 9, Problem 7P

(a)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $61.

Introduction:

Nominal rate of Return: Nominal rate is the rate that is mentioned with the concerned security or financial instrument. It determines the basic cost of finance without any compounding effect.

Perpetual Preferred Stock: Perpetual preferred stock is a financial instrument for long term financial assistance required by the companies. A category of preferred stock that doesn’t have a maturity date and is available without any fixed tenure is called perpetual preferred stock.

(b)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $90.

(c)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $100.

(d)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $138.

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Answer 5

Chapter 9, Problem 7P

(a)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $61.

Introduction:

Nominal rate of Return: Nominal rate is the rate that is mentioned with the concerned security or financial instrument. It determines the basic cost of finance without any compounding effect.

Perpetual Preferred Stock: Perpetual preferred stock is a financial instrument for long term financial assistance required by the companies. A category of preferred stock that doesn’t have a maturity date and is available without any fixed tenure is called perpetual preferred stock.

(b)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $90.

(c)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $100.

(d)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $138.

Answer 6

Chapter 9, Problem 7P

(a)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $61.

Introduction:

Nominal rate of Return: Nominal rate is the rate that is mentioned with the concerned security or financial instrument. It determines the basic cost of finance without any compounding effect.

Perpetual Preferred Stock: Perpetual preferred stock is a financial instrument for long term financial assistance required by the companies. A category of preferred stock that doesn’t have a maturity date and is available without any fixed tenure is called perpetual preferred stock.

Answer 7

Chapter 9, Problem 7P

(a)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $61.

Introduction:

Nominal rate of Return: Nominal rate is the rate that is mentioned with the concerned security or financial instrument. It determines the basic cost of finance without any compounding effect.

Perpetual Preferred Stock: Perpetual preferred stock is a financial instrument for long term financial assistance required by the companies. A category of preferred stock that doesn’t have a maturity date and is available without any fixed tenure is called perpetual preferred stock.

Answer 8

(b)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $90.

Answer 9

(b)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $90.

Answer 10

(c)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $100.

Answer 11

(c)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $100.

Answer 12

(d)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $138.

Answer 13

(d)

Summary Introduction

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $138.

Answer 14

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Answer 25

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Solution Summary: The author explains the nominal rate of return on a perpetual preferred stock with current market price of 61.

Concept explainers

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $90.

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $100.

To compute: The nominal rate of return on a perpetual preferred stock with current market price of $138.

Chapter 9 Solutions