Here the question directs you to use the expense figure under Exhibit 4, because even $4181 as the total periodic expense may not be all under P & L, 1619 ($4181-2562) has been held up in OCI under IFRS. CFA questions are always tricky.
Calculating Preferred stock (American term), UK is called Preference Shares. Valuation of Preferred stock is in between Bond and Equity. Hence use RF and add equity premium is OK. CAPM is for more or less valuaation of equity.
I discovered this last week Exhitit Spot rate Year 1 : 1.1% (answer 1.1%) year 2: 1.5% (1.504%) year 3: 2.01% (answer 2.0213%). Take the exihit spot rate to cacluate still got the answer $103.49 to buy the strip and sell the bond. In actual examination the numbers are of big difference to save candidates from agrument. Mock examinations are having many errors. Be sure to practice with the concept. End of chapters in the curriculum are good practice. Some are taken from actual examination.
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