1 Fris B. Corporation stock is currently selling for $42.86. It is expected to p

Question

1 Fris B. Corporation stock is currently selling for $42.86. It is expected to pay a dividend of $3.00 at the end of the year. Dividends are expected to grow at a constant rate of 3% indefinitely. Compute the required rate of return on FBC stock.
A7%
B33%
C4.3%
D10%

2 Green Corp.'s preferred stock is selling for $20.83. If the company pays $2.50 annual dividends, what is the expected rate of return on its stock?
A12.00%
B2.50%
C8.33%
D20.00%

3 World Wide Interlink Corp. has decided to undertake a large project. Consequently, there is a need for additional funds. The financial manager plans to issue preferred stock with an annual dividend of $5 per share. The stock will have a par value of $30. If investors' required rate of return on this investment is currently 20%, what should the preferred stock's market value be?
$15
$10
$20
$25

Explanation / Answer

C A B

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