Question: 1. What will be the nominal rate of return on a preferred stock with a $100 par value, a stated dividend of 8 percent of par, and a current market price of
(a) $60,
(b) $80,
(c) $100, and
(d) $140?
2. Martell Mining Company's ore reserves are being depleted, so its sales are falling. Also, its pit is getting deeper each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 5 percent per year. If D0 $5 and rs 15%, what is the value of Martell Mining's stock?