12 Assume that as investment manager of Maine Electric Company's pension plan (which is exempt from income taxes), you must choose between Exxon bonds and GM preferred stock. The bonds have a $1.000 par value; they mature in 20 years they have a 7% stated interest rate paid semi-annually, they are callable at Exxon's option at a price of $1,150 after 5 years, and they sell at a price of $815.98 per bond. The Preferred stock is perpetuity: it pays a dividend of $1.50 each quarter, and it sells for $75 per share. Assume interest rates do not change. What is the most likely effective annual rate of return on the higher yielding security