ADM Labs is a publicly owned company with several issues of capital stock outstanding. Over the past

Question:

ADM Labs is a publicly owned company with several issues of capital stock outstanding. Over the past decade, the company has consistently earned modest profits and has increased its annually by 5 or 10 cents per share. Recently the company introduced several new products that you believe will cause future sales and profits to increase dramatically. You also expect a gradual increase in long-term interest rates from their present level of about 11 percent to, perhaps, 12 percent to 12¼ percent.
Instructions
On the basis of these forecasts, explain whether you would expect to see the market prices of the following issues of ADM capital stock increase or decrease. Explain your reasoning in each answer.
a. 10 percent, $100 preferred stock (currently selling at $90 per share).
b. $5 (currently paying an annual of $2.50 and selling at $40 per share).
c. 7 percent, $100 convertible preferred stock (currently selling at $125 per share).

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...