1. What is the price of a preferred stock where the dividend rate is 6% on a $100 par value? The appropriate required rate of return of the stock of this risk level is 20%.

a. $106.00

b. $60.00

c. $94.00

d. $30.00

2. An analyst has modeled the stock of ABC company using a two-factor model based on APT. The expected risk-free rate is 3% plus tge impact of two risk factors. The numerical value of the expected return for the first factor is 8%. and the numerical value of expected return for the second factor is 10%. The sensitivity of the first factor is 0.4 and sensitivity if the second factor is 0.6.

What is the ABC's required or predicted return?

a. 13%

b. 9.2%

c. 16%

d. 14.5%