(Preferred stock yield) Consolidated Edison’s 4.65% Series C cumulative preferred stock trades on the New York Stock Exchange. The stock has face value $100 and pays its dividend four times per year, on the first of February, May, July, and November. The stock is not redeemable.

a. If the share price on 2 February 2005 is $85, what is the preferred stock’s yield?

b. Suppose that the stock trades for $87.50 on 3 January 2005. What is its yield? (Don’t forget that the price does not include the accrued dividend.)