What is the current yield of leisure limited preferred stock

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a) Leisure Limited just paid dividend of $50 per share. The dividend is expected to grow at a constant rate of 4% a year. The required rate of return on Leisure Limited's common stock is 9% a year.

Required:

Question (i) What is Leisure Limited's common stock current value?

Question (ii) What is Leisure Limited's common stock expected price two years from now?

(b) Leisure Limited issued perpetual preferred stock with 7.5% annual dividend. The stock price is HK$115 and its par value is $100.

Required:

Question (i) What is the current yield of Leisure Limited's preferred stock?

Question (ii) Suppose the market interest rate rises and Leisure's preferred stock's yield rises to 8%. What is the price of Leisure's preferred stock then?

Reference no: EM132519113

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