A preferred stock can be thought of as a bond in which the coupons (dividends) continue forever
Question:
A preferred stock can be thought of as a bond in which the coupons (dividends) continue forever and for which there is no redemption date.
(a) Find the price of a preferred stock which pays semiannual dividends of 3, if the purchaser wishes to earn 12% per year convertible semiannually.
(b) State a general formula for the price of a preferred stock paying a yearly dividend of X, if the desired yield rate is /
per year.
(c) State a general formula for the price of a preferred stock paying a quarterly dividend oiX, if the desired yield rate is /
per year.
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