1. A firm has a perpetual preferred stock that pays quarterly dividends of $2.50. If its current price is $60, what is its rate of return (r) and the effective annual rate (EAR)?
2. The beta of Citadelof Inc. stock is 0.80, whereas the risk free rate of return is 3%. if the expected market portfolio return is 16%, then what is the stocks expected return based on the CAPM?
3. A company has just paid a dividend of $6.50 for its common stock, and it is unlikely to change the dividend amount paid out. if the required rate of return is 6.25%, what is the price of the stock today?