Average Return	Standard Deviation
Small-cap stock	16.6%	31.9%
Large-cap stock	12.0	19.9
Long-term corporate bonds	6.3	8.4
Long-term government bonds	6.0	9.9
U.S. Treasury bills	3.4	3.1
Portfolios:
90% stocks/10% bonds	11.3%	17.9%
70% stocks/30% bonds	10.1	14.2

1) Stock of Popcorp, Inc. has a beta of 1.2. It's a large cap stock. Using the capital asset pricing model, calculate the required return. Using the information in the table above for required inputs.

2) Popcorp, Inc. has an expected annual dividend for the coming year of 2.00 per share. The dividends is expected to grow at a constant rate of 2% per year. It has a beta of 0.8. Use the constant growth (Gordon) model, what is the intrinsic value of Popcorp, Inc. stock? Refer to the first question for needed information.

3) Redcorp, Inc. issued preferred stock. It's a small cap stock. It has a par value of $100 and has a dividend of 6% of par. The applicable rate of return for small cap stocks is 16%. The risk-free rate is 3%. What's the value of the preferred stock?