The required return of preferred stock is equal to the ________ ________ on the preferred stock.

Recognize the formula for dividend yield: Dividend yield is calculated as the annual dividend divided by the market price of the preferred stock. In MathML, the formula is: $\frac{\mathrm{Annual\; Dividend}}{\mathrm{Market\; Price}}$

Understand the relationship: The required return on preferred stock is equal to the dividend yield because investors base their return expectations on the dividends they receive relative to the stock's market price.