Problem 14-03

What should be the prices of the following preferred stocks if comparable securities yield 8 percent?

Use Appendix B and Appendix D to answer the questions.

Book: Mayo's Basic Finance: An Introduction to Financial Institutions, Investments, and Management, 12th ISBN: 9780357044278 Part:14.3Valuation (Pricing) of Preferred Stock

Round your answers to the nearest cent.

MN, Inc., $10 preferred ($120 par)

$

CH, Inc., $10 preferred ($120 par) with mandatory retirement after 10 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., $10 preferred ($120 par)

$

CH, Inc., $10 preferred ($120 par) with mandatory retirement after 10 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- fall or rise?

Answer:

In which case was the price more volatile?

While the prices of both preferred stocks -Select: -declined or increased, the price of the -Select: -perpetual preferred stocks or stocks with mandatory retirement was more volatile.

Answer: