1. An issue of preferred stock is paying an annual dividend of $1.50. The growth rate for the firm's common stock is 5%. What is the preferred stock price if the required rate of return is 7%?
$30.00
$21.43
$22.50
None of these options
2. An issue of common stock has just paid a dividend of $2.00. Its growth rate is equal to 4%. If the required rate of return is 7%, what is its current price?
$80.00
None of these options
$19.04
$69.33
3. If the yield to maturity on a bond is greater than the coupon rate, you can assume
the price is above par.
interest rates have decreased.
risk premiums have decreased.
the price is below par.
4. If you invest $26,000 at 7% interest, how much will you have in 15 years? Use Appendix A. (Round "FV Factor" to 3 decimal places.)
$71,734
$9,412
$35,412
$126,506