Assume That You Would Like to Purchase 100 Shares of Preferred

question 55

Multiple Choice

Assume that you would like to purchase 100 shares of preferred stock that pays an annual dividend of $6 per share.However,you have limited resources now,so you cannot afford the purchase price.In fact,the best that you can do now is to invest your money in a bank account earning a simple interest rate of 6 percent,but where interest is compounded daily (assume a 365-day year) .Because the preferred stock is riskier,it has a required annual rate of return of 12 percent (assume that this rate will remain constant over the next 5 years) .For you to be able to purchase this stock at the end of 5 years,how much must you deposit in your bank account today,at t = 0?

• A) $2,985.00
• B) $4,291.23
• C) $3,138.52
• D) $3,704.18
• E) $4,831.25

---

Definitions:

Victorians

Refers to people or aspects of life during the reign of Queen Victoria of England, marked by strict morals and propriety.

Sexting

The sending or receiving of suggestive or explicit texts, photos, or video messages via computers or mobile devices.

Seminude Pictures

Seminude pictures are photographs in which the subjects are partially clothed or partially uncovered, exposing parts of the body typically considered private.

Sexually Suggestive

Content or behavior that hints or implies sexual intent, often in a subtle or indirect way.