Given the conditions for this problem, the value of share price to the preferred stock is $42.85.
What does stock mean?
In finance, "stock" usually refers to shares of ownership in a company. When you buy stock in a company, you are purchasing a portion of the company, and you become a shareholder. Stockholders are entitled to a portion of the profits of the company, as well as voting rights in certain corporate decisions.
In this example, dividend per share is $3 and the required return is 7%. Applying the pricing formula, we find that the value per share of preferred stock is as follows:
Value per Share = Dividend per Share / Required Return on Preferred Stock
Value per Share = 3 / 7%
Value per Share = 42.85
Therfore the share price is $42.85.
To know more about Stocks,
https://brainly.com/question/1193187
#SPJ4
