1. The formula for the valuation of a shared preferred stock is p0 =Dp / kp. In the equation, the variable kp represents the _____________

required return of the investment

tax rate on the investment

annual divended rate of the share

2. Sydney is considering the purchase of 650 shares of the preferred stock of Universal Computer Corporation. The stock carries a par value of $100 per share and an annual dividend rate of 5.75%. Alternative investments of comparabel risk are generating yields of 4.25%. Given this information, the per share value of Universal Computer's preferred stock should be:

$101.47

$121.76

$135.29

$169.11

3. Sydney has to postpone her purchase of Universal Computer's preferred shares for just over seven months. By the time she is ready to invest, the return on altnerative investments of comparable rish has increased. She should expect the cost of her investment in Universal Computer's preferred shares to be _________expensive.

less

more

4. Assume that Sydney delays her investment for another few months, and that when she is finally ready to make 650-share investment in Universal Computer, the market price of Universal Computer's preferred stock has changes to $182.64 per share. If she pays this price to acquire each share of Universal Computer's preferred stock, what rate of return will Sydney earn on her investment? Remember that the shares have a par value of $100 and a dividend rate of 5.75%.

3.15 %

2.99%

4.10%

2.52%