Preferred Stock Value
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There is a fixed dividend of $6 per share. With the passage of time, yields have soared from the original 6% to 14%:
What was the original issue price?
What is the current value of this preferred stock?
If the yield on the Standard & Poor's Preferred Stock Index declines, how will the price of the preferred stock be affected?
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Solution Summary
The solution explains how to calculate the price of a preferred stock.
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What was the original issue price?
The preferred stock is a perpetuity and so the yield on a preferred stock is given as Dividend Amount/Price.
The original yield at the time of issue as 6%. The dividend amount is $6. We ...
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