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XYZ Company had preferred stock outstanding that pays $7 annual dividend. If investors required rate of return is 12% What is the market value of
- XYZ Company had preferred stock outstanding that pays $7 annual dividend. If investors required rate of return is 12%
- What is the market value of the shares? ___________________
- If the required return declines to 10%, what is the change in the price of the stock?
Stock Price: ________________ Change in Stock Price: ______________
- What would the prices of the following preferred stock if comparable securities yield 6%?
- $5 preferred ($100 par) ________________
- $5 preferred ($100 par) with a mandatory retirement after 20 years ___________
- You are considering purchasing the preferred stock of a firm but are concerned about its capacity to pay the dividend. Compute the times-preferred-dividend-earned ratio for the years 2011, 2012, and 2013 from the following information in thousands of dollars:
Year | 2011 | 2012 | 2013 |
Operating Income | 10,000 | 12,000 | 15,000 |
Interest | 3,000 | 5,000 | 10,000 |
Taxes | 4,000 | 5,000 | 4,000 |
Preferred Dividends | 1,000 | 1,100 | 1,200 |
Common Dividends | 3,000 | 2,000 | 2,000 |
Net Income | 3,000 | 2,000 | 1,000 |
2011 ratio: __________________
2012 ratio: __________________
2013 ratio: __________________
- A $100 preferred stock pays an annual dividend of $4. Currently, the yield on comparable preferred stock is 6%. What should be the price of this stock?
___________________________
- A preferred stock with a maturity date of 10 years has the face value of $100 and an annual dividend of $3.
- What should be the price of this stock if the comparable yield was 4%? ____________
- What would be the price of this stock if the comparable yield was 6%? ____________
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