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(1 pt) A share of preferred stock pays dividends at a predetermined rate, and so can be thought of as a bond that pays coupons
(1 pt) A share of preferred stock pays dividends at a predetermined rate, and so can be thought of as a bond that pays coupons forever and has no redemption value. Suppose that such a share of stock pays semiannual dividends that increase by 2 percent with each dividend, and the first dividend is 7 dollars. If the price of the stock is 111 dollars, what is the yield rate? (Give your answer as the nominal rate convertible semiannually.) Answer = percent
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