1. The beta is 2, the market is expected to earn 15% and the risk free rate is 4%. ABC Inc. has paid the following dividends. 2015 $3, 2016 $3.24, 2017 $3.50. What is a fair price?
2. In the previous problem, what would your annual rate of return be if you bought the rights to the lottery payments from Ignatz for $4,121,888?
3. Holdup Bank has an issue of preferred stock with a $6 stated dividend that just sold for $93 per share. What is the bank's cost of preferred stock?