The Vegas Corporation had both common stock and preferred stock outstanding from 2010 through 2012. Information about each stock for the three years is as follows:
The company paid $70,000, $400,000, and $550,000 in dividends for 2010 through 2012, respectively. The market price per common share was $15 and $17 per share at the end of years 2011 and 2012, respectively.
1. Determine the dividends per share and total dividends paid to the common and preferred stockholders each year.
2. Assuming that the preferred stock was noncumulative, repeat the computations performed in requirement 1.
3. Calculate the 2011 and 2012 dividends yield for common stock using dividends per share computed in requirement 2.
4. How are cumulative preferred stock and noncumulative preferred stock similar to long-term bonds? How do they differ from long-term bonds?
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