Question

Preferred stock differs from common stock in that preferred stock:

Preferred stock always receives a stated interest payment if the company is solvent, but they are subject to being called. Bondholders have first call on payment. Common stock dividends are at the discretiuon of management, and may be zero.

Answer 1

stock has a required return of 10%. The stocks divided yield is 6%. what is the dividend the fim is expected to pay in one year if the current stock prioce is $40