Financial Management - Study Mode
[#776] Preferred dividend is divided for required rate of return to calculate
Correct Answer
(C) value of preferred stock
Explanation
Solution: Preferred dividend is divided for required rate of return to calculate value of preferred stock. The value of a preferred stock equals the present value of its future dividend payments discounted at the required rate of return of the stock. In most cases the preferred stock is perpetual in nature, hence the price of a share of preferred stock equals the periodic dividend divided by the required rate of return.
[#777] Value of stock is Rs 400 and required rate of return is 20% then preferred dividend would be
Correct Answer
(A) Rs 80.00
Explanation
Solution: Preferred Dividend = Value of stock * Required rate of return = 400 * 20% = Rs. 80.00
[#778] An amount of company retain earning, return on equity and inflation are factors which effect
Correct Answer
(A) earning growth
Explanation
Solution: An amount of company retain earning, return on equity and inflation are factors which effect earning growth. Earnings growth is the annual compound annual growth rate (CAGR) of earnings from investments.
[#779] Value of stock is Rs 300 and preferred dividend is Rs 60 then required rate of return would be
Correct Answer
(B) 20%
Explanation
Solution: Required rate of return = Preferred dividend / Value of stock * 100 = 60 / 300 * 100 = 20%.
[#780] Tracking stock of company is also classified as
Correct Answer
(A) target stock
Explanation
Solution: Tracking stock of company is also classified as target stock. Target Stock means any Target Preferred Stock and/or any Target Common Stock.