Reference no: EM132756539

Problem 1: One thousand shares of 10% preferred stock totals $100,000 and has a call price of $110 per share. Common Stock totals $200,000, Additional Paid-in Capital, $50,000, and Retained Earnings, $50,000. A total of 10,000 shares of common stock have been issued and are outstanding. Assuming dividends are two years in arrears, what is the book value of the preferred stock?

A. $100.00 per share

B. $110.00 per share

C. $120.00 per share

D. $130.00 per share

E. None of the above

Problem 2: The dividend yield on preferred stock is 10% on a market price of $80 per share at the end of Year One. The preferred stock is selling for $40 at the end of Year Two. What is its dividend yield at the end of Year Two?

A. 20%

B. 10%

C. 8%

D. 16%