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What’s value of a preferred stock if we assume it has a quarterly dividend $1.25 per...

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Finance

What’s value of a preferred stock if we assume it has aquarterly dividend $1.25 per share and the required rate of returnis 10%?

$5

$25

$50

$100

Other than dividend growth model, we can employ Market MultipleAnalysis method for stock valuation. We suppose a firm's estimatedearnings per share is $2. The average price to earnings (P/E) ratiofor similarly publicly traded firms is 10. What's the firm'sexpected stock price?

$25

$20

$22.5

$27

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Solution Calculation of Value of preferred stock The formula for calculating the value of preferred stock is Annual Dividend of preferred stock Required rate of Return As per the    See Answer
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Transcribed Image Text

What’s value of a preferred stock if we assume it has aquarterly dividend $1.25 per share and the required rate of returnis 10%?$5$25$50$100Other than dividend growth model, we can employ Market MultipleAnalysis method for stock valuation. We suppose a firm's estimatedearnings per share is $2. The average price to earnings (P/E) ratiofor similarly publicly traded firms is 10. What's the firm'sexpected stock price?$25$20$22.5$27

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