Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A preferred stock pays a $4 dividend each quarter. Assuming an investor requires a 12% return on the stock, what is a fair price using the dividend discount model ?
Group of answer choices
$33.33
$100.00
$133.33
$533.33
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- Preferred stock valuation Jones Design wishes to estimate the value of its outstanding preferred stock. The preferred issue has a par value of $100 and pays an annual dividend of $6.10 per share. Similar-risk preferred stocks are currently earning an annual rate of return of 7.6%. a. What is the market value of the outstanding preferred stock? b. If an investor purchases the preferred stock at the value calculated in part a, how much does she gain or lose per share if she sells the stock when the required return on similar-risk preferred stocks has risen to 8.8%? ... a. The market value of the outstanding preferred stock is $ per share. (Round to the nearest cent.) b. If the required return on similar-risk preferred stocks has risen to 8.8%, the value of the stock will be $ per share. (Round to the nearest cent.) If an investor purchased the preferred stock at the value calculated in part a and sells the stock when the required return on similar-risk preferred stocks has risen to 8.8%,…arrow_forwardWhat is the annual dividend on an 8 percent preferred stock that currently sells for $45 and has a face value of $100 per share? Group of answer choices $8.00 None of the possible numerical answers given is correct $3.60 None of the four possible given answer is correct $4.00 $5.00arrow_forwardYou purchased 395 shares of ABC common stock on margin at $25 per share. Assume the initial margin is 55% and the maintenance margin is 35%. Below the stock price of __________ you would get a margin call. Assume the stock pays no dividend and ignore interest on margin. Group of answer choices 17.31 18.40 14.67 16.80 16.41arrow_forward
- A company has earnings per share of $3.75 and P/E of 47. What is the stock price? Question 12 options: $174.08 $176.25 $185.95 $112.98arrow_forwardA perpetual preferred stock pays a $1.65 annual dividend and has a required return of 5.81%. The value is closest to A. $28.40. B. $31.33. C. $33.79. D. $36.55.arrow_forwardAn index consists of the following securities. What is the value-weighted index return? Value-weighted Stock Shares Outstanding Beginning Share Price Ending Share Price L 4,000 $ 18 $ 26 M 3,000 $ 35 $ 41 Multiple Choice 22.03% 22.85% 25.25% 28.25% 30.00%arrow_forward
- # 1 A firm issues preferred stock with a dividend of $3.42. If the appropriate discount rate is 7.05% what is the value of the preferred stock? Submit Answer format: Currency: Round to: 2 decimal places. unanswered not_submitted Attempts Remaining: Infinity %23arrow_forwardff2arrow_forwardDetermine the value of a share of Max Pax $7.55 cumulative preferred stock to an Investor who requires a 7.85% rate of return. Question 12Answer a. $86.29 b. $78.85 c. $45.50 d. $70.06arrow_forward
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