1. Positive Tronics Industries preferred stock has a par value of $100 and pays a dividend of $6.00 per share. It presently sells for $87 per share. What do investors require as a rate of return on this stock? Round off to the nearest .10%.
9.3%
6.9%
6.0%
2. What is the value of a preferred stock that pays a $4.50 dividend to an investor with a required rate of return of 10%?
$22.22
$27.83
$45
$55.50
3. H. J. Corp. common stock paid $2.50 in dividends last year (D0). Dividends are expected to grow at a 12-percent annual rate forever. If H. J.'s current market price is $40.00, what is the stock's expected rate of return (nearest .01 percent)?
5.50%
11.00%
18.25%
19.00%