The First Bank of Ellicott City has issued perpetual preferred stock with a $100

Question

The First Bank of Ellicott City has issued perpetual preferred stock with a  $100 par value. The bank pays a quarterly dividend of $1.65 on this stock.  What is the current price of this preferred stock given a required rate of  return of 13.0   percent? (Round  answer to 2 decimal places, e.g. 15.25.)

Current price $ The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 13.0 percent? (Round answer to 2 decimal places, e.g. 15.25.)

Explanation / Answer

Hi,

Please find the answer as follows;

Current Price = Annual Dividend/Required Return = (4*1.65)/13% = 50.77

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.