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4 May, 04:31

Allison Corp. has just issued nonconvertible preferred stock (cumulative) with a par value of $20 and an annual dividend rate of 4.25%. The preferred stock is currently selling for $18.75 per share. What is the annual yield or return (r) on this preferred stock? 4.26% 4.53% 4.11% 4.87%

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  1. 4 May, 04:33
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    4.53%

    Explanation:

    Data provided as per the question is below

    Annual dividend rate = 4.25% with par value $20

    Currently selling = $18.75

    The calculation of annual yield or return is shown below:-

    Annual dividend = $20 * 4.5%

    = $0.85

    Annual yield or return = Annual dividend : Current selling price per share

    = 0.85% : $18.75

    = 0.045333

    = or 4.53%
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