The preferred stock of Dallas Platinum Exchange has a par value of $31 and pays a 7% dividend rate per year. You calculated a beta of 0.51 for the stock. The risk-freerate is 4.11% and the market return is 9.2%. Assuming that CAPM holds, what is the intrinsic value of this preferred stock? DO NOT ENTER THE $ SIGN. ALSO,ENTER YOUR ANSWER AS A POSITIVE NUMBER. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO TWO DECIMAL PLACES AT THE END, i.e.IF YOUR ANSWER IS 33.4348 ENTER IT AS 33.48 ONLYQuestion 4Your broker has developed a list of firms, their betas, and the return he expects the stock to yield over the next twelve months (labeled "Expected Return"). You haveestimated that the risk-free rate is 5% and the return to the market will be 12%. Assuming that CAPM is correct, which stock should you purchase?O Nathan's BakeriesO Z-man ElectronicsO OO All of the stocksOOO Anderson, Inc.O Delta VanlinesFirmBeta ExpectedReturnAnderson, Inc. 0.90 10.5%Delta Vanlines 1.24 13.0%Nathan's1.50 16.0%BakeriesZ-manElectronics2.15 19.0%

Preferred stocks are paid dividend on the par value and value of stock depends on the required rate…

he preferred stock of Dallas Platinum Exchange has a par value of $31 and pays a 7% dividend rate per year. You calculated a beta of 0.51 for the stock. The risk-free ate is 4.11% and the market return is 9.2%. Assuming that CAPM holds, what is the intrinsic value of this preferred stock? DO NOT ENTER THE $ SIGN. ALSO, NTER YOUR ANSWER AS A POSITIVE NUMBER. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO TWO DECIMAL PLACES AT THE END, i.e. F YOUR ANSWER IS 33.4348 ENTER IT AS 33.48 ONLY

he preferred stock of Dallas Platinum Exchange has a par value of $31 and pays a 7% dividend rate per year. You calculated a beta of 0.51 for the stock. The risk-free ate is 4.11% and the market return is 9.2%. Assuming that CAPM holds, what is the intrinsic value of this preferred stock? DO NOT ENTER THE $ SIGN. ALSO, NTER YOUR ANSWER AS A POSITIVE NUMBER. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO TWO DECIMAL PLACES AT THE END, i.e. F YOUR ANSWER IS 33.4348 ENTER IT AS 33.48 ONLY

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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