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What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 12% of par, and a current market price of (a) $56.00, (b) $76.00, (c) $116.00, and (d) $133.00? Round your answers to two decimal places. %

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OreoMagie

Given :

[tex] \text{Preferred share par value = $30} [/tex]

[tex] \text{Dividend per share (Dp) = $10 ($100×10%)} [/tex]

Required :

[tex] \text{Normal rate of return (rp)} [/tex]

Formula :

[tex] \text{rp =} \frac{Dp}{Vp} [/tex]

Where,

[tex] \text{Vp = price of preferred share} [/tex]

[tex] \text{Dp = dividend per share} [/tex]

[tex] \text{Rp = normal rate of return of preferred share} [/tex]

Solve for nomial rate of return (rp) :

Refer The Attachment

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