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Problem 14-03

What should be the prices of the following preferred stocks if comparable securities yield 10 percent? Use Appendix B and Appendix D to answer the questions. Round your answers to the nearest cent.

MN, Inc., $5 preferred ($110 par)

$

CH, Inc., $5 preferred ($110 par) with mandatory retirement after 8 years

$

What should be the prices of the following preferred stocks if comparable securities yield 14 percent? Round your answers to the nearest cent.

MN, Inc., $5 preferred ($110 par)

$

CH, Inc., $5 preferred ($110 par) with mandatory retirement after 8 years

$

In which case did the price of the stock change?

As with the valuation of bonds, an increase in interest rates causes the value of preferred stock to -Select-fallriseItem 5 .

In which case was the price more volatile?

While the prices of both preferred stocks -Select-declinedincreasedItem 6 , the price of the -Select-perpetual preferred stockstock with mandatory retirementItem 7 was more volatile.