A. This is the par value of the stock.

B. If the investors' required rate of return is lower than the rate of return based on the par value, the price of the preferred stock will be above its par value, not below.

C. This is the par value of the stock plus the investors' required rate of return.

D. If the preferred stock pays a 5% annual dividend on the par value of $100, the annual dividend will be $100 × .05, or $5. If investors require a 3.75% rate of return, we use the perpetual annuity model and divide the annual dividend of $5 by the required rate of return of $3.75 to calculate the market value of the stock. $5 / .0375 = $133.33.