Question

What is the yield to maturity (YTM) on a share of Six Flags B $1.81 preferred stock if an investor buys the stock at the following market prices? Assume dividends are paid annually.

Answer 1

Answer is given below.

Step-by-step explanation:

Preferred stock yield = dividend/ stock price

a) dividend =$1.81 , stock price =$30

Preferred stock yield = $1.81/$30= 6.033%

b) dividend =$1.81 , stock price =$25

Preferred stock yield = $1.81/$25=7.24 %