X-Tech Company issued preferred stock many years ago. It carries a fixed divi- Preferred stock dend of $5.00 per share. With the passage of time, yields have soared from the value original 5 percent to 12 percent (yield is the same as required rate of return).

a. What was the original issue price?

b. What is the current value of this preferred stock?

c. Ifthe yield on the Standard & Poor’s Preferred Stock Index declines, how will the price of the preferred stock be affected?