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.

Answer rating: 100% (QA)

Preference shares 100 Dividend 77 Required rate5 Price of ... View the full answer