1- A preferred stock pays a $1.00 constant dividend and sells at a price of $12. What is the cost of preferred stock?

A) 8.33%

B)10%

C)11%

D)12%

2- The risk free rate is 5% and the expected return on the market portfolio is 12.5%. What is the cost of equity for a firm with a beta equal to 1.5?

A)10.25%

B)12.5%

C)15%

D)16.25%