The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 11.5 percent?

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The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value that pays a quarterly dividend of $1.65. To calculate the current price of this preferred stock given a required rate of return of 11.5%, we need to use the formula for a perpetuity – which is simply the dividend amount divided by the required rate of return expressed as a decimal.

Therefore, in this case it would be ($1.65/$0.115) = $14.35 which means that at an 11.5% required rate of return, the current price for each share in The First Bank’s perpetual preferred stock would be worth $14.35 (which is equal to its par value).

However, it should also be noted that since this is a perpetual security then its actual price will fluctuate based on prevailing market conditions and/or changes made to its established dividend payments over time – meaning investors may get more or less than what they paid initially depending upon when they choose purchase/sell these shares.

Overall then, when looking at pricing options like these it is important to always factor in both short-term risks and long-term returns so that one can make informed decisions around investing their money accordingly.