# A preferred stock has a par va

1. A preferred stock has a par value of BHD 40, pays a 5% dividend. The required rate of return is 15%. What is this stock worth to you?
1. 19.27
2. 13.33
3. 7.85
 Probability Asset A (%) Asset B (%) Good 0.45 8.00 15.00 Moderate 0.30 4.00 8.00 Poor 0.25 1.50 -5.00

2) Using the data above, what is the variance of asset A?

a-7.38

b-4.52
c- 6.11

3) Consider a firm that just paid a dividend of BD2.50. They plan to increase dividends by 4% in the first three years and 8% in year four per year thereafter. The required rate of return is 10%. What is the value of the stock?

a-130.44

b-120.80

c-125.78

4)

 A B C Correlation AB 0.9 Price 15 8 6 Correlation BC 0.7 Return 12% 6% 4% Correlation AC 0.6 Standard Deviation 0.45 0.24 0.15

Using the data above, what is the portfolio variance?

a-0.25

b-0.42
c-0.16

5) The BD 2,500 face value bond has a coupon rate of 5%, with interest paid semi-annually, and matures in 8 years. If the bond is priced to yield 10%, what is the bond’s value today?

a-1,822.64

b-1,200.67

c-1,568.15

6)

 Stock Cost Beta Yearly Income Value Today A 20 1.15 2 27 B 45 2 8 40 C 32 1.25 6 45

Using the data above, what is the rate of return for stock C?

a-40%

b-25%

c-35%

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