Rouster and Arts Corp. pays an annual dividend rate of 9.80% on its preferred stock that currently
Question:
Rouster and Arts Corp. pays an annual dividend rate of 9.80% on its preferred stock that currently returns 13.13% and has a par value of $100. What is the value of Rouster and Corp's stock?
Suppose, due to high inflation, interest rates rise and pull the preferred stock's yield to 17.07%, what will be the value of the preferred stock?
A company issues preferred stock to raise financial capital. It pays annual dividends to the preferred shareholders out of profits. The payment of dividends to preferred shareholders typically has priority over those paid to holders of common stock. The return on preferred stock is the annual dividend as a percentage of the selling price of the stock.
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk