1. What is the value of a preferred stock where the dividend rate is 18 percent on a $100 par value, and the market's required yield on similar shares is 14 percent?
2. Dubai Metro's stock price was at $100 per share when it announced that it will cut its dividend for next year from $10 per share to $6 per share, with additional funds used for expansion. Prior to the dividend cut, Dubai Metro expected its dividends to grow at a 4 percent rate, but with the expansion, dividends are now expected to grow at 7 percent. How do you think the announcement will affect Dubai Metro's stock price?