Question 5How much will an investor pay for a preferred stock that pays a $1,50 per share dividend if the investor requires a 11.5% return?O $13.04O $1.35O $1.67O $14.54O None of the listed items is correctL» A Moving to another question will save this response.MacBook Air77888escF3F4F5F2#$%34

PRICE OF PREFERRED STOCK =DIVIDEND RATE

Answered: How much will an investor pay for a…

How much will an investor pay for a preferred stock that pays a $1.50 per share dividend if the investor requires a 11.5% return? O $13.04 $1.35 $1,67 $14.54 None of the listed items is correct

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Ma3. Question 7 The PX exchange uses maker/taker pricing: orders that add liquidity receive a rebate of $0.001 per share; orders that take liquidity pay $0.002 per share. Sam just entered an order to buy 100 shares limit $20. This order goes into the book. Shortly thereafter Mona enters an order to sell 100 shares, limit $19. a. What is the price paid by Sam net of maker-taker pricing? b. What is the price received by Mona net of maker-taker pricing?
H4 You sell short 18 shares of Wells Fargo &Co that are currently selling at $54 per share. You post the 0.56 margin required on the short sale. If your broker requires a 0.37 maintenance margin (MMR), at what stock price will you get a margin call? (You earn no interest on the funds in your margin account, and the firm does not pay any dividends.)
points Return to question Item 7 Problem 3-19 (Algo) You are bearish on Telecom and decide to sell short 100 shares at the current market price of $36 per share. Required: a. How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position? b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places.)
Question 20 You want to purchase some shares of Auto Board stock but need a 15% rate of return to compensate for the perceived risk of such ownership. What is the maximum you are willing to spend per share to buy this stock if the company pays a constant R4,90 annual dividend per share? 1. R25,40 2. R32,67 3. R59,33 4. R70,87
S 4 DiFiore Corporation's $100 face value fixed-rate preferred stock pays an annual dividend of $7.50 per share. What is the value of one share of this stock to an investor who requires a rate of return of 9.50%? a. $ 71.25 b. Cannot determine from the data given. c. $ 78.95 d. $ 100.00
A2 10c May I please have the answer in formula form and not excel. thx:) 10. Aunt Kathleen owns 3000 preferred shares of ABC Inc., and she is thinking of selling 100 of these shares to pay for a new computer. These shares pay a stable quarterly dividend of $0.65 per share (i.e., there will be four dividend payments in a year, and each payment is $0.65 per share). Aunt Kathleen’s required return is 12% APR compounded semi-annually. c. What is the estimated stock price based on the Constant Dividend model?
7. Answer both questions: a) The stock of Payout Inc. will go ex-dividend tomorrow. The dividend will be $1 per share. There are 20,000 shares of stock outstanding. The market value balance sheet for Payout is below: Assets Liabilities and equity Cash $100,000 Equity $1,000,000 Fixed assets $900,000 i) What price is Payout selling for today? Explain your answer. ii) What price will it sell for tomorrow? Explain your answer. b) Now suppose that Payout announces its intention to repurchase $20,000 worth of stock instead of paying out the dividend. i) What effect will the repurchase have on an investor who currently holds 10 shares and sells 2 of those shares back to the company in the repurchase? ii) Compare the effects of the repurchase to the effects of the cash dividend that worked out in 7(a).
Subject: Financial strategy & policy Question No 3 (part ii) Answer the following. ii) XYZ Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $97.00; but flotation costs will be 5% of the market price per share. What is the cost of the preferred stock, including flotation?
H2. The current price of a non-dividend paying stock is 172.5. The continuously compounded risk free rate is 0.03. A savvy investor notices a mispriced five-year forward contract to pay 196 in exchange for one share of the stock. In order to exploit this mispricing, the investor shorts a share of the stock now, invests the money gained in the account earning 0.03, and then plans to settle the forward contract in five years. What is the final net earned by the investor?
5.2 (q3) A share has just paid a dividend of $4.96, and this dividend is expected to grow at the rate of 3% in perpetuity. If the current price of the share is $70.2, what is the cost of ordinary shares for the firm? a. 7.47% b. 10.28% c. 12.14% d. 10.07%
elizabeth eaarns $9.50 a share, sells for $90, and pays a $6 per sharedeviden. the stock is split two for one and a $3 pers share cash dividend is diclared. what will be the new price of the stock? if the firms total earnings to do not change, what is the payout ratio before and after stock split?
C) usually with the assistance of an investment banker. D) A and B. E) B and C. 2. You purchased 100 shares of ABC common stock on margin at $70 per share. Assume the initial margin is 50% and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin. A) $21 B) $50 C) $49 D) $80 E) none of the above 3. Assume you sell short 100 shares of common stock at $45 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $40/share? The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction. A) 20% B) 25% C) 22% D) 77% E) none of the above 4. You purchased 1000 shares of common stock on margin at $30 per share. Assume the initial margin is 50% and the stock pays no dividend. What would the maintenance margin be if a margin call is made at a stock price of $24?

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