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18 June, 08:32

Wallace Container Company issued $100 par value preferred stock 10 years ago. The stock provided an 8 percent yield at the time of issue. The preferred stock is now selling for $74. What is the current yield or cost of the preferred stock?

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  1. 18 June, 10:21
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    Current dividend paid = 8% x $100 = $8

    Current yield = Current dividend paid

    Current market price

    Current yield = $8

    $74

    Current yield = 0.1081 = 10.81%

    Explanation:

    Current yield is the ratio of current dividend paid to current market price. The current dividend paid is $8 and the current market price is $74. The division of current dividend by current market price gives current yield.
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Home » Business » Wallace Container Company issued $100 par value preferred stock 10 years ago. The stock provided an 8 percent yield at the time of issue. The preferred stock is now selling for $74. What is the current yield or cost of the preferred stock?
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