Green Caterpillar Garden Supplies pays an annual dividend rate of $15\mathrm{.}40\%$ on its Preferred stock is often called a hybrid security because it has some characteristics that are typical of debt and others that are typical of common

equity. The following table lists several characteristics of preferred stock. Determine which of these characteristics are consistent with debt securities

and which are consistent with common stock.

Characteristic

Its dividends are fixed in amount.

It has a par, or face, value.

Consider the case of Green Caterpillar Garden Supplies:

Green Caterpillar Garden Supplies pays an annual dividend rate of $15\mathrm{.}40\%$ on its preferred stock that currently returns $20\mathrm{.}64\%$ and has a par value of

$$100\mathrm{.}00$ per share. The preferred stock issue does not mature, and computes its annual dividend as the product of its dividend rate and its par value.

What is the current market value of Green Caterpillar's preferred stock?

$$80\mathrm{.}58$ per share

$$74\mathrm{.}61$ per share

$$102\mathrm{.}96$ per share

$$65\mathrm{.}66$ per share

Suppose that there is high unemployment, which causes interest rates to fall, which in turn pulls the preferred dividend yield to $17\mathrm{.}75\%.$ Then the

value of Green Caterpillar's preferred stock will

to

$.$ This is because interest rates $($and security returns$)$ and security

values are

related.preferred stock that currently returns $20\mathrm{.}64\%$ and has a par value of $$100\mathrm{.}00$ per share. The preferred stock issue does not mature, and computes its annual dividend as the product of its dividend rate and its par value. What is the current market value of Green Caterpillar$$s preferred stock?