Warren Buffett expects a 6% return on Goldman Sach’s preferred stock, and the dividend is expected...

Warren Buffett expects a 6% return on Goldman Sach’s preferred stock, and the dividend is expected to be $1.30 every six months, what is the fair price for this preferred stock per share?

A) $43.333

B) $21.667

C) $86.667

D) $ 1.245

None of the above

Solutions

Expert Solution

Fair price = Annual dividend / Return

Fair price = ($1.30 * 2) / 0.06

Fair price = $43.333

jeff jeffy answered 1 year ago

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