You are planning to purchase 100 shares of perferred stock and must choose between stock A and stock B. Stock A pays an annual dividend of $4.50 and is currently selling for $35. Stock B pays an annual dividend of $4.25 and is selling for $36.

You are planning to purchase 100 shares of preferred stock and must choose between stock A and stock B. Stock A pays an annual dividend of $4.50 and is currently selling for $35. Stock B pays an annual dividend of $4.25 and is selling for $36. If your required return is 12 percent, which stock should you choose?

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