SIE Exam Question 452: Answer and Explanation

Question: 452

An investor owns 100 shares of XYZ 8% participating preferred stock. XYZ's common stock pays a quarterly dividend of $.25. How much will the investor earn each year in dividends?

• A. $900.
• B. $825.
• C. $180.
• D. $90.

Correct Answer: A

Explanation:

A: The investor will receive $8 per share × 100 shares: $800 plus $1 per share because it is participating, so $800 + $100 = $900.