1. An issue of preferred stock is paying an annual dividend of $4.50. The growth rate for the firm's common stock is 7%. What is the preferred stock price if the required rate of return is 10%? (Round your answer to 2 decimal places.) $42.50, $50.00, $45.00, $47.50.

2. Steve bought 300 shares of stock at a price of $20 per share. The price of the stock then went up to $33 per share so Steve decided to hedge his position by purchasing 3 puts at a cost of $120 each. The puts have an exercise price of 30. One week prior to the expiration of the puts, the price of the stock was at $22 per share. If Steve closed out all of his positions at that time, he would have earned a net profit of

A) $200.

B) $240.

C) $2,640.

D) $3,000.