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P16.8 Charlene Weaver likes to speculate with preferred stock by trading on movements in market interest rates. Right now, she believes the market is poised
P16.8 Charlene Weaver likes to speculate with preferred stock by trading on movements in market interest rates. Right now, she believes the market is poised for a big drop in rates. Accordingly, she is thinking seriously about investing in a certain preferred stock that pays $6.97 in annual dividends and is currently trading at $91.36 a share. What rate of return will she realize on this investment if the market yield on the preferred drops to 5.34% within two years? What if the drop in rates takes place in one year? If the market yield on the preferred drops to 5.34% within 2 years, the rate of return will be %. (Round to two decimal places.) If the market yield on the preferred drops to 5.34% in 1 year, the rate of return will be %. (Round to two decimal places.)
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