Question

Sixth fourth bank has an issue of preferred stock with a $6.10 stated dividend that just sold for $123 per share. what is the bank's cost of preferred stock? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,

e.g., 32.16.) cost of preferred stock %

Answer 1

A preferred stock is a class of possession in a company that has a developed claim on its properties and incomes than common stock.
The formula would be:
RE = D1 / P1
RE = 6.10 / 123
RE = 0.0496
Multiply this to 100%
Bank's cost of preferred stock is 4.96%