Question???? Stocks & Bonds?

Question

If I have a preferred stock outstanding that pays a dividend of $5 at the end of each year.
The preferred stock sells for $60 a share. What is the preferred stock’s required rate of return?

Answer 1

The required rate of return is anything below the actual that we can compute from the numbers you gave. 5/60 = 1/12 = 0.0833 or 8.33%. So the required rate could be 1% or 4% or 8%, but more has been given out.