Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 10. aunt kathleen owns 3000 preferred shares of ab

10. Aunt Kathleen owns 3000 preferred shares of ABC Inc., and she is thinking of...

70.2K

Verified Solution

Question

Finance

10. Aunt Kathleen owns 3000 preferred shares of ABC Inc., and she is thinking of selling 100 of these shares to pay for a new computer. These shares pay a stable quarterly dividend of $0.65 per share (i.e., there will be four dividend payments in a year, and each payment is $0.65 per share). Aunt Kathleens required return is 12% APR compounded semi-annually.

  1. What is the effective annual return (EAR) based on an APR of 12% compounded semi-annually? (1 mark)
  2. What is the effective return per dividend payment period for Aunt Kathleen? (1 mark)
  3. What is the estimated stock price based on the Constant Dividend model? (2 marks)
  4. What is the maximum amount of money that Aunt Kathleen can spend on the new computer if she only uses the receipts from the sale of 100 shares of ABCs preferred shares to pay for it? (1 mark)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

If a chemical was to block the transport of electrons from ferredoxin to NADP+ reductase how...

Biology
Q

Were you surprised that we were not better prepared for COVID-19, given what happened with SARS?...

Biology
Q

what is thymus

Medical Sciences
Q

Slime molds and Entamoebas belong to Amoebozoa Supergroup Even though they are under the same...

Biology
Q

Two charges of equal magnitudes and at a distance r exert a force F on...

Physics
Q

Diameter of human eye lens is 2 mm What will be the minimum distance between...

Physics
Q

Given the following five number summary find the NOR 07 13 2

Statistics
Q

The P value measures the strength of evidence O A sometimes against the null hypothesis...

Statistics
Q

Evaluate the integral 3x 1 10 2x dx OA 12 10 2x3 5 4 C...

Calculus
Q

Write the following in terms of sin r and cos 2 and then simplify if...

Algebra
Q

John and Sandy Ferguson got married eight years ago and have a seven-year old daughter...

Accounting
Q

Current Attempt in Progress Your answer is partially correct. The Dynatech Corporation produces an executive...

Accounting