QUESTIONS 79 THROUGH 90 RELATE TO EQUITY INVESTMENTS

82. - MOCK AND SAMPLE EXAMS CFA CFA LEVEL I MOCK EXAM AFTERNOON 2013
MOCK AND SAMPLE EXAMS CFA CFA LEVEL I MOCK EXAM AFTERNOON 2013
82. A company’s series B, 8% preferred stock has the following features:  A par value of $50 and 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 earnings. The intrinsic value estimate of a share of this preferred issue is closest to: A. $33.33. B. $45.02. C. $52.00.