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problem: You are offered two alternatives: a share of preferred stock which pays you 40 dollar per year [but the actual payments are made quarterly] for ten years; or some fifteen year US savings bond that pays 6 percent coupon per year [on a quarterly basis] and with a face value of 100 dollar. The preferred stock and the bond have beta risks of 0.5 and 0.2, respectively. The risk-free interest rate [on a quarterly basis] is four percent and the expected market return [also on a quarterly basis] is 12 percent. How many bonds have to offer to you for each share of preferred stock in order to make you indifferent between the two alternatives?

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