Answer:
4.63%
Explanation:
Expected / Required Rate of return is the % return demanded by an investor while purchasing a shareholder. Preferred stock is assumed to pay a dividend for infinity, the price of the share is calculated as follows for the stock paying constant dividend:
Price: Dividend / Rate of return
$42.16 = 1.95 / Rate of return
Rate of return = $1.95 / $42.16
Rate of return = 4.63%
