1. Blanket Promise Co. preferred stock sells for $70 per share. The stock pays an annual dividend of $3.30. What is the component cost of preferred stock used to compute the firm's weighted average cost of capital?

a. 4.71%

b. 5.50%

c. 6.60%

d. Cannot be determined without the growth rate

e. 8.89%

2. When creating a portfolio with stocks from very different industries, adequate diversification is expected to have been achieved when the portfolio contains at least __________ stocks.

a. 80

b. 100

c. 200

d. 15

e. 60