1. An Allied Northern preferred stock pays a $3.84 annual dividend. What is the value of the stock to an investor who requires a 9.5% return?
A. 40.42
B. 42.67
C. 38.40
D. 39.21
2. What is the value of the share of stock of HOV Inc., to an investor who requires a 12% rate of return if HOV’s current dividend is $1.20? Assume earnings and dividends are expected to grow at a compound annual rate of 7%.
A. $24.00
B. $18.34
C. $25.68
D. $19.82