Tiger recently bought 100 shares of Niki peferred stock. The prferred stock pays

Question

Tiger recently bought 100 shares of Niki peferred stock. The prferred stock pays $6 in dividends annually and is currently selling for $75. If his required reate of return on stock was 10%, how much would he be willing to pay per share? a. $50 b. $60 c. $75 d. $100 If under current business conditions Tigers required rate of return is 3% he expects inflation to be 2.5% and he assigns a ris premium of 1.5% to Nike. How much would he be willing to pay for a share of Niki Stocks. 1. $66.67 2. $73.72 3. $75.00 4. $85.71

Explanation / Answer

2. $73.72

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