Consider the following case of Wellington Industries:

Wellington Industries pays an annual dividend rate of 10.20% on its preferred stock that currently returns 13.67% and has a par value of $100.00 per share. What is the value of Wellington's preferred stock?

$100.00 per share

$111.92 per share

$89.54 per share

$74.62 per share

Suppose that due to high inflation, interest rates rise and pull the preferred stock's yield to 17.77%. The value of the preferred stock will increase/decrease.