You are planning to purchase 200 shares of preferred stock and must choose between stock in...

You are planning to purchase 200 shares of preferred stock and must choose between stock in the Jackson Corporation and stock in the Fields Corporation. Your required rate of return is 13.84 percent. If the stock in Jackson pays a dividend of $3.00 and is selling for $21 and the stock in Fields pays a dividend of $3.75 and is selling for $28, which stock should you choose?

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Expert Solution

expected return= dividend/ selling price

	jackson corporation	fields corporation
dividend	3	3.75
selling price	21	28
expected return(d/sp)	14.286%	13.393%

required return is 13.84%

so jackson corporation must be choosed
because its expected return is greater than the required return

jeff jeffy answered 1 year ago

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