1. Lindell, Inc. has 8% , $100 par value preferred stock outstanding. To earn 12% on an investment in this stock, you need to purchase the shares at a per share price of

• $66.67

• 77.30

1. Ivonne has bought shares of RIO, Inc. stock for $25.00 per share. She expects a 1.00 dividend at the end of this year. After 2 years, she expects to receive a dividend of $1.25 and to sell the stock for $28.75. What is Ivonne's required rate of return?

• 11. 6%

• 12.66

• 13.13%

1. Markhem Enterprises is expected to earn $1.34 per share this year. The company has a dividend payout ratio of 40% and a P/E ratio of 18. What should one share of common stock in Markhem Enterprises be selling for in the market?

• $24.12

• $33

1. The risk-free rate of return is 4.2 percent, the expected market return is 9 percent, and the beta for Lea, Inc. is 1.12. What is Lea's required rate of return?

• 9.58%

• 13%

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