Reference no: EM132995636

Problem 1: A share of preferred stock pays a dividend of $0.27 annually. The required rate of return is 5%. What is the preferred stock's price per share? Round to the nearest cent

a) $5.40
b) $4.60
c) $7.10
d) $6.20

Problem 2: Select the best choice below. The implication for investors of efficient markets is that if they really are efficient:

a) truly skilled investors should be able to earn unusually high returns by picking winners more often than other investors
b) investors cannot earn positive returns on average
c) investors should watch and read every possible investing source prior to buying stock
d) investors should not expend resources picking stocks since all will represent fair values

Problem 3: If investors require an 8% ?return, and the preferred stock pays an annual end-of-year dividend of $6.75, what is the market price per share?

a) $84.38
b) $83.75
c) $84.20
d) $83.98