Answer:
(a) $51.92
(b) She will face a loss of $7.66
Explanation:
(a) Market Value of Preferred Stock:
= Dividend ÷ Required Return
= $5.40 ÷ 10.4%
= $51.92
(b) If she sells the stock when the required return on similar-risk preferred stocks has risen to 12.2%.
Market value of the securities:
= $5.40 ÷ 12.2%
= $44.26
therefore,
Market value of the securities - Market Value of Preferred Stock
= $44.26 - $51.92
= $7.66
She will face a loss of $7.66
Answer:
The answer is 'Buy a Stock Index Future'
Explanation:
To take best advantage of this situation, Mr Smith should go long(buy) on this stock.
Stock Index Future js a method of derivates. Futures, like forward contract is a forward commitment which obligates the buyer to purchase an asset or the seller to sell an asset and have a predetermined future date and price. Future is used to hedge against worse future situations.
Private costs and external costs are separated by economists. Private expenses are those incurred by the company manufacturing the item. Someone not connected to the transaction is responsible for external expenses. The contrast between private and external advantages is the same.
<h3>What do you mean by private costs?</h3>
Any expense that an individual or business incurs to purchase or create products and services is referred to as a private cost.
This covers the price of labor, supplies, equipment, and everything else that an individual or business pays for.
Any adverse impacts or injury brought on as a result of the production are not included in the private cost.
Driving a car has several personal expenditures, including gasoline and oil, maintenance, depreciation, and even the amount of time the driver spends behind the wheel.
Private expenses must be considered when making decisions about production and consumption since they are paid for by the company or the customer.
To learn more about private cost, refer to the following link:
brainly.com/question/24188698
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