Question Help | * (Preferred stock valuation) Pioneers preferred stock is sellin

Question

Question Help | * (Preferred stock valuation) Pioneers preferred stock is selling for $59 in the market and pays a $4.10 annual dividend a. If the market's required yield is 6 percent, what is the value of the stock for that investor? b. Should the investor acquire the stock? a. The value of the stock for that investor is$ per share. (Round to the nearest cent) b. Should the investor acquire the stock? (Select from the drop-down menus) acquire the stock because it is currently V in the market Enter your answer in the answer box

Explanation / Answer

a) Value of Preffered stock is = (Annual Dividend/Required Yield) Value of Preffered stock is = (4.10/0.06) Value of Preffered stock is = $ 68.33/. Approx. Value of the stock for that investor is $ 68.33 per share b) Since the value of the stock is more than the Present selling price of the stock. The Investor should aquire the stock because currently lower in the market.

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