An issue of 8.5% Series C preferred stock has a par value of $75 million or $40 per share and was sold to investors several years ago at par. According to the terms of the issue, the preferred is scheduled to be redeemed in 25 years at its par value of $40 per share. Dividends are paid quarterly but analyzed as if paid annually. The stock is currently trading at a discount for $35 per share.

7. The Convexity of the Preferred Stock with the data given in question #5 (data below) [on an annual basis with m = 1], is now:

1. 66.8
2. 110.4
3. 121.2
4. 121.5
5. 133.7

Suppose now the redeemable preferred has a redemption schedule requiring redemption of 1/15 of the original issue, or $5 million, at the end of years 11 through 25. It also specifies that the Trustee must randomly select the shares to be redeemed in each year. What is the expected term to redemption and rate of return with this redemption schedule?