Question: 1. (Preferred stockholder expected return) Zust preferred stock is selling for $42.16 per share and pays $1.95 in dividends. What is your expected rate of return if you purchase the security at the market price?
2. (Preferred stockholder expected return) You own 200 shares of Shapard Resources' preferred stock, which currently sells for $40 per share and pays annual dividends of $3.40 per share.
a. What is your expected return?
b. If you require an 8 percent return, given the current price, should you sell or buy more stock?