FIN 300 Quiz 4 Stock solutions FALL2020 2 - Quiz #4 Stock...

Quiz #4 Stock Solutions
1. Builtrite preferred stock has a 6%(4%) coupon based on a par value of $45
($55) a share. Currently, investors require a 5% return. What is the value of
Buil trite’s preferred stock?
2. Builtrite common stock is currently selling for $30 ($60) and recently paid a
dividend of $1.50 ($3.50). The stock has a projected constant growth rate of 7%
(6%). If you purchase this stock, what is your expected rate of return?
3. Builtrite preferred stock pays 4%(5%) dividend based on a par value of $55
($64). The stock is currently selling at $50 ($70). If you purchase the stock, what
is your expected return?
4. Builtrite stock just paid a dividend of $5 ($4) and dividends are expected to