Acort industries owns assets that will have an 80% probability of having a market value of $50 million in one year. there is a 20% chance that the assets will be worth only $20 million. the current risk-free rate is 5%, and acort’s assets have a cost of capital of 10%

$40 million

Explanation:

E[Value in one year] = 0.8 (50) + 0.2 (20) = 44 = 44

E = 44/1.10 = $40 million

e. The preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase (on a pro-data basis) new issues of preferred stock.

Explanation:

Preferred shareholders have a right to access to any benefits prior to any other class of security holders.

Basically as the name suggests they are preferred first in all instances. Even in case of new issue of preference capital the advantage to apply for those shares is first given to existing shareholders of preference capital.

This is basically true, as their other features include fixed return in the form of dividends.