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The cost of preferred stock is equal to the preferred stock dividend:

A)
divided by the market price.
B)
divided by its par value.
C)
multiplied by the market price.



The cost of preferred stock, kps, is Dps ÷ price.

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A $100 par, 8% preferred stock is currently selling for $80. What is the cost of preferred equity?

A)
10.8%.
B)
8.0%.
C)
10.0%.



kps = $8 / $80 = 10%

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