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%? ____________