A COMPANY’S SERIES B, 8% PREFERRED STOCK WITH A PAR VALUE OF $50 P...

44. - MOCK AND SAMPLE EXAMS CFA 2012 L1 SAMPLE EXAM V1 QUESTION 44. - MOCK AND SAMPLE EXAMS CFA 2012 L1 SAMPLE EXAM V1 QUESTION
MOCK AND SAMPLE EXAMS CFA 2012 L1 SAMPLE EXAM V1 QUESTION
44. A company’s series B, 8% preferred stock with a par value of $50 pays quarterly dividends. Its current market value is $35. The shares are retractable (at par) with the retraction date set for three years from today. Similarly rated preferred issues have an estimated nominal required rate of return of 12%.Analysts expect a sustainable growth rate of 4% for the company’s earning. The intrinsic value estimate of a share of this preferred issue is closest to: A. $33.33. B. $45.02. C. $52.00.