Question

In: Finance

Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold...

Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold for $89 per share. What is the bank's cost of preferred stock?


Options:

8.00%

9.35%

9.44%

8.63%

8.99%

Solutions

Expert Solution

Cost of preferred stock Annual dividend÷Stock price
Here,
Annual dividend $                                                                       8
Preferred stock price $                                                                    89
Cost of preferred stock 8.99%
8÷89

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