Asked by Joe

Saturated Meat Corporation preferred stock is currently selling for $22 per share. The preferred dividend is $2.50 per share. If Jennifer requires a return of 10% on the preferred stock, should she invest in this stock?
Answered by Ms. Sue
10% of 22 = 2.2

What do you think?

Answered by Joe
I think not but why?
Answered by Ms. Sue
She should buy this stock. The yearly dividend is $2.50. That is more than 10% of the investment.



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