N

:
US prefered stocks
UK preference shares

1) ---

2) --A) Cumulative prefered stocks

Non- Cumulative prefered stocks

B)

C)

D)

3)

a. Claim on Income

b. Claim on asessts

4)

P331
10-15
Vps = Dps / r ps = $6 / 12% = $50
10-16
Vps = Dps / r ps = $3.6 /10% =$36
Rps = Dps / Vps = $3.6 / $33 = 10.91% > 10%
If the investor can actually buy the stock for
$33 per share, the investor should do so.
The investor should realize the rate of

return will be 10.91%.

Round to the nearest 0.10%. 4
Round to the nearest $0.10. 2
10-17
Dps = $100 * 14% = $14
rps = 12%
Vps = $116.67
10-18
rps = $3.4 / $40 = 8.5%
r = 10%
The investor should not sell because it is
overvalued.
Vps = $3.4 / 10% = $34
Thus, the price of the stock should be $34,
but it is $40. This is not a good investment
for people because the stock is overvalued
and I should not sell them or buy more.

10-19
Vps = $4.5 / 14%
= $32.14
If the investors can get the stocks for $25
per share, then the investors should invest
them because the stocks are undervalued.