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What preference share is appropriately described as being

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Problem 1: A company's $20 face value preference shares have a dividend rate of 7 percent and a required rate of return of 11 percent. If the market price per share for the preference share is $15, the preference share is appropriately described as being:

a. overvalued by $2.27

b. undervalued by $7.27

c. overvalued by $15

d. undervalued by $12.73

e. overvalued by $12.73

Reference no: EM132760040

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