Preferred dividend is divided by preferred stock price multiply by (1-floatation cost) is used to calculate
A. transaction cost of preferred stock
B. financing of preferred stock
C. weighted cost of capital
D. component cost of preferred stock
Answer: Option D
Solution (By Examveda Team)
Preferred dividend is divided by preferred stock price multiply by (1-floatation cost) is used to calculate component cost of preferred stock. Cost of preferred stock is the rate of return required by holders of a company's preferred stock. It is calculated by dividing the annual preferred dividend payment by the preferred stock's current market price.This Question Belongs to Commerce >> Financial Management
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