Question

Allison Corp. has just issued nonconvertible preferred stock​ (cumulative) with a par value of​ $20 and...

Allison Corp. has just issued nonconvertible preferred stock​ (cumulative) with a par value of​ $20 and an annual dividend rate of​ 4.25%. The preferred stock is currently selling for​ $18.75 per share. What is the annual yield or return​ (r) on this preferred​ stock?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Par value of preferred stock = $    20.00
Annual dividend rate = 4.25%
Annual dividend = 20 * 4.5% = $       0.85
Current market price = $    18.75
Annual yield or return = Annual dividend / Current market price
0.85/18.75
0.045333 or 4.53%
So, Annual dividend or return on preferred stock is 4.53%
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
(a) Salam Investment has outstanding borrowings that include preferred stock. One of these borrowings is (nonconvertible)...
(a) Salam Investment has outstanding borrowings that include preferred stock. One of these borrowings is (nonconvertible) preferred stock (cumulative) with a par value of $250 and an annual dividend rate of 8.25%. This preferred stock is currently selling for $260 per share. Calculate the required rate of return on this nonconvertible preferred stock (b) Jusco Malaysia is selling for $30 a share. In looking at the stream of dividends over the past ten years, you find out that the first...
(a) Company A has issued perpetual preferred stock with a par value of $100. The stock...
(a) Company A has issued perpetual preferred stock with a par value of $100. The stock pays an annual dividend of $6 and its current price is $60. (i) What is the dividend yield of Company A’s preferred stock? (ii) What is the total return of holding Company A’s preferred stock for year 1?   (b) Company B has just paid a dividend of $2.45 per share. The company will increase its dividend by 20% next year and then reduce its...
On January 1, Stahl Company issued 5,000 shares of 6%, $20 par value, cumulative preferred stock...
On January 1, Stahl Company issued 5,000 shares of 6%, $20 par value, cumulative preferred stock for $25 per share. Record the required transaction.
Herro Corp. preferred stock is selling for $55 per share in the market. This preferred stock...
Herro Corp. preferred stock is selling for $55 per share in the market. This preferred stock has a par value of $40 and a dividend rate of 14 percent. Answer the following: 1.What is the current yield on the stock? 2. If an investor has a required rate of return of 18 percent, what is the value of the stock for that investor? 3. Should the investor acquire the stock? Explain. 4. Explain why preferred stock is referred to as...
The majority of nonconvertible preferred stock is bought and held by ______ investors. All else being...
The majority of nonconvertible preferred stock is bought and held by ______ investors. All else being equal, is a firm more or less likely to purchase preferred stock as an investment if its tax rate increases? Less likely Doesn’t matter More likely Consider the case of THC Endowment: THC Endowment is an institutional investor and owns preferred stocks worth a 20% stake in Scorecard Corp. Scorecard Corp. paid out dividends of $197,400 to THC Endowment this year. Scorecard Corp. had...
RocoPo Corp. had issued preferred stock with a par value of $100 and each share pays...
RocoPo Corp. had issued preferred stock with a par value of $100 and each share pays 6% dividend annually. Currently, each share of this preferred stock is trading at $70. What is the company's cost of preferred stock? When answering this problem enter your answer using percentage notation but do not use the % symbol and use two decimals (rounding). For example, if your answer is 0.10469 then enter 10.47; if your answer is 10% then enter 10.00 Your Answer:
TXS Manufacturing has an outstanding preferred stock issue with a par value of ​$6060 per share....
TXS Manufacturing has an outstanding preferred stock issue with a par value of ​$6060 per share. The preferred shares pay dividends annually at a rate of 1111​%. a.  What is the annual dividend on TXS preferred​ stock? b.  If investors require a return of 88​% on this stock and the next dividend is payable one year from​ now, what is the price of TXS preferred​ stock? c.  Suppose that TXS has not paid dividends on its preferred shares in the...
Assume CGM Corp has issued and outstanding 22,000 shares of 5%, $25 par value preferred stock...
Assume CGM Corp has issued and outstanding 22,000 shares of 5%, $25 par value preferred stock and issued and outstanding 15,000 shares of $15 stated value common stock. The board of directors declares dividends of $100,000 on December 15, 2020, the preferred stock is cumulative, and dividends paid to the preferred stockholders has been as follows: 2017 - $13,750; 2018 - $21,250; and 2019 - $15,000. What amount is allocated to common stockholders?
In 2018, Libra Sdn Bhd issued a RM100 par value preferred stock which pays a 7...
In 2018, Libra Sdn Bhd issued a RM100 par value preferred stock which pays a 7 percent annual dividend. The company requires a 5 percent rate of return. What price would you be willing to pay for a share of the preferred stock if you receive your first dividend one year from now? If the current market is selling this preferred stock at RM12.50, will you buy? Explain your decision.please write elaborately
TXS Manufacturing has an outstanding preferred stock issue with a par value of ?$69 per share....
TXS Manufacturing has an outstanding preferred stock issue with a par value of ?$69 per share. The preferred shares pay dividends annually at a rate of 11% a.??What is the annual dividend on TXS preferred? stock? b.??If investors require a return of 4% on this stock and the next dividend is payable one year from? now, what is the price of TXS preferred? stock? c.??Suppose that TXS has not paid dividends on its preferred shares in the last two years...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT