P16.6 Charlene Weaver likes to speculate with preference shares by trading on movements in market interest rates.
Question:
P16.6 Charlene Weaver likes to speculate with preference shares by trading on movements in market interest rates. Right now, she believes the market is poised for a big drop in rates.
Accordingly, she is thinking seriously about investing in a certain preference share that pays $7 in annual dividends and is currently trading at $75 a share. What rate of return will she realise on this investment if the market yield on the preference share drops to 6.5% within two years?
What if the drop in rates takes place in one year?
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Kirti Kaushal
Having experience of more than 10 years is good enough to coach my students. Currently, I am working as an active supervisor of ACCA students. In my career, I helped students in financial accounting, management accounting, cost accounting, financial reporting, taxation, and audit. I also helped students publish their articles or papers in good journals. I also helped students with thesis and objective writing.
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Related Book For 
Fundamentals Of Investing
ISBN: 9781442532885
3rd Edition
Authors: Lawrence J. Gitman, Michael D. Joehnk, Scott Smart, Roger Juchau, Donald Ross, Sue Wright
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