(Preferred stock valuation)Calculate the value of a preferred stock that pays a dividend of $2.50

per share when the market's required yield on similar shares is 14 percent.

The value of the preferred stock is ____ per share.

(Expected rate of return using CAPM)

a.Compute the expected rate of return for Intel common stock, which has a 1.4 beta. The risk-free rate is 3 percent and the market portfolio (composed of New York Stock Exchange stocks) has an expected return of 14 percent.

b.Why is the rate you computed the expected rate?