1.Part A) A non-callable preferred stock of Alpha Inc, with 100 par value was traded in the market for $74. This preferred stock has fixed return of 10% which is paid at the end of every year. If your required rate of return was 12%, suggest through intrinsic value calculation if you should have bought this stock or not at the beginning of the year.

Part B) Below mentioned common stocks are being traded in the stock market:

STOCK BETA

Alpha Business Corp 1.50

Hardware Supply, Inc 0.80

Charlie and sons Company 0.60

Woodworks 1.80

Nice Cola Company 1.05

Banana Ltd. 0.70

i. Calculate the portfolio beta if your portfolio consists of 10% of each of the first 4 stocks, and 30% of the last two stocks?

ii. Calculate the portfolio return if return on treasury bills is 9% and market return is 15%