The correct answer is A (€6.62). To calculate the semi-annual dividend, we use the formula for the intrinsic value of a preferred stock:

$V_0 = \sum_{t=1}^{n} \frac{D}{(1 + r)^t} + \frac{F}{(1 + r)^n}$

Where:

• $V_0$ = Intrinsic value (€125)
• $F$ = Par value per share (€100)
• $r$ = Semi-annual required rate of return (7.2% annual rate divided by 2 = 3.6%)
• $n$ = Number of semi-annual periods (5 years × 2 = 10)

Solving for $D$ (the semi-annual dividend), we arrive at approximately €6.62.

Option B (€7.20) is incorrect because it mistakenly applies the annual required rate of return (7.2%) directly to the par value (€100), resulting in an annual dividend of €7.20, not the semi-annual dividend.

Option C (€9.00) is incorrect because it applies the annual required rate of return (7.2%) to the intrinsic value (€125), resulting in an annual dividend of €9.00, which is not the semi-annual dividend.