Respuesta :
Answer:
$70.97
Explanation:
The computation is shown below:
Preferred stock current market price = Dividend ÷ Required rate of return
where,
Dividend is
= 5.5% × $100
= $5.5
And, the required rate of return is 7.75%
So, the preferred stock current price is
= $5.5 ÷ 7.75%
= $70.97
We simply divide the dividend by the required rate of return
The Preferred stock's current market price is $70.97.
What is preferred stock?
Preferred stock is those shares of a company's stock that have preferential rights before any common shareholders.
Calculation of Preferred stock's current market price
[tex]\begin{aligned}\text{Preferred Stock current market price}&=\dfrac{\text{Dividend}}{\text{Required rate of return}}\\&=\dfrac{(5.5\% \times \$100)}{7.75\%}\\&=\$70.97\end{aligned}[/tex]
Therefore, the preferred stock's current market price is $70.97.
Learn more about Preferred Stock here:
https://brainly.com/question/15078323
