Alistar Inc. recently issued $90 par value preferred stock that pays a 8.25% dividend rate per year. If the stock is currently selling for $85, what is the expected return of this preferred stock?

8.74%

Explanation:

Calculation for the expected return of this preferred stock

First step is to find the Annual dividend using this formula

Annual dividend= Par value x Dividend rate

Let plug in the formula

Annual dividend=$90 par value×8.25% dividend rate

Annual dividend=7.425

Second step is to calculate for the expected return of the preferred stock

Using this formula

Expected return=Annual dividend/Current price

Let plug in the formula

Expected return=7.425/$85

Expected return=8.74%

Therefore the expected return of this preferred stock will be 8.74%

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: