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Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold for $92 per share. What is the bank's cost of preferred stock?

Respuesta :

Answer:

Discount rate will be 8.6 %

Explanation:

We have given that dividend = $8

And stock is given as  = $92

We know that stock value is given by

We have to find the discount rate

Stock value [tex]=\frac{dividend}{discount\ rate}[/tex]

So discount rate [tex]=\frac{dividend}{stock\ value}=\frac{8}{92}=0.086=8.6[/tex] %

So discount rate will be 8.6 %

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