a. Computation of Value of Mystery's Preferred Stock:

Value of Preferred Stock = Annual Dividend/Required Rate of Return

Here,

Annual Dividend = Face Value*Stated Rate = $1,000 (assume)*7.5% = $75

Required Rate of Return = 7%

Value of Preferred Stock = $75/7% = $1,071.43

b.  If the market price is higher than the par value than stock is trading at premium.

The value is above the par value because of required rate of return , If required rate of return keep on decreasing price of the stock keep on increasing and required rate of return will increase the price of stock will decrease.