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The majority of nonconvertible preferred stock is bought and held by institutional investors. All else being equal, is a firm more or less likely to purchase preferred stock as an investment if its tax rate increases? Less likely 0 More likely Doesn't matter Consider the case of THC Endowment: THC Endowment is an institutional investor and owns preferred stocks worth a 20% stake in Shoe Building Inc. Shoe Building Inc. paid out dividends of $222,600 to THC Endowment this year. Shoe Building Inc. had issued perpetual preferred stock with a par value of $100 and pays a(n) 10.60% annual dividend. Investors' required return on Shoe Building Inc.'s preferred stock is 14.20%, and the tax rate for both the companies is 25%. Based on the information given, calculate the following: The current market price of Shoe Building Inc.'s preferred stock is: THC Endowment tax liability on its dividend income will be: Value $55 650 Consider that Shoe Building Inc. also issued market auction preferred stock. Which of the following is true about market auction preferred stock? Yield set on the issue after an auction on the preferred stock is the lowest yield sufficient o sell all shares being offered at that auction. Yield set on the issue after an auction on the preferred stock is the highest yield sufficient to sell all shares being offered at that auction.