Asked by CECILIA SIOCO on May 17, 2024
Verified
Total return for preferred stock consists of:
A) capital gains yield.
B) dividend yield.
C) dividend yield and the present dividend.
D) capital gains yield and dividend yield.
Dividend Yield
A metric that reveals the annual dividend payments of a company as a proportion of its current stock price.
Preferred Stock
A class of ownership in a corporation with a higher claim on assets and earnings than common stock, usually without voting rights.
Capital Gains Yield
Capital gains yield is the rise in price of an investment or asset, expressed as a percentage of the initial purchase price.
- Discern between common and preferred stock by evaluating their particular qualities.
Verified Answer
HF
Hillary FosterMay 21, 2024
Final Answer :
D
Explanation :
Total return for preferred stock is the sum of the capital gains yield and the dividend yield. The capital gains yield is the change in the market price of the stock, while the dividend yield is the annual dividend payment divided by the current market price. Therefore, both capital gains yield and dividend yield contribute to the total return of preferred stock.
Learning Objectives
- Discern between common and preferred stock by evaluating their particular qualities.