Preferred Stock Valuation - CFA® Level 1 Exam Preparation

The Value of Preferred Stock with Company Earnings of $30 and Required Rate of Return of 10%

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What is the value of a preferred stock with company earnings of $30 and a required rate of return of 10%?

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A. B. C. D. E.

E

The value of a preferred stock is the present value of its dividends, which is equal to the annual dividend divided by the required rate of return. Since the annual dividend is not given, one cannot answer this question.

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