Calculate the Rate of Return on Zeta Industries Preferred Stock
What is the rate of return on Zeta Industries Preferred Stock if it pays a $15 annual dividend and has a current market price of $150 per share?
According to the given information, the rate of return on the Zeta Industries Preferred Stock is 10%.
Rate of Return Calculation:
The rate of return on a stock is calculated by dividing the annual dividend by the current market price of the stock. In this case, the annual dividend is $15 and the market price of a share of Zeta Industries Preferred is $150.
To calculate the rate of return, we divide the annual dividend ($15) by the market price ($150):
Rate of return = Annual dividend / Market price
Rate of return = $15 / $150
Rate of return = 0.1
To convert this decimal into a percentage, we multiply it by 100:
Rate of return = 0.1 x 100
Rate of return = 10%
Therefore, the rate of return on the Zeta Industries Preferred Stock is 10%.
Zeta Industries Preferred Stock is a wise investment choice with its 10% rate of return. Understanding how to calculate the rate of return on a stock allows investors to make informed decisions and maximize their returns. In this case, the annual dividend of $15 provides a stable income stream for investors, while the market price of $150 per share offers potential for capital appreciation.
By knowing the rate of return on the Zeta Industries Preferred Stock, investors can assess the profitability of their investment and adjust their portfolios accordingly. It's essential to consider factors like dividend payouts and market prices when evaluating the performance of a stock.
Ultimately, calculating the rate of return on a stock enables investors to make sound financial decisions and achieve their investment goals. With a clear understanding of the rate of return, investors can build a successful portfolio and secure their financial future.