Tando Airlines has preferred stock outstanding that has a par value equal to $100. Preferred dividend payments
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Question:
Tando Airlines has preferred stock outstanding that has a par value equal to $100. Preferred dividend payments equal 8 percent of the stock's par value. If Tando's preferred stock currently sells for $160,, what is the rate of return that preferred stockholders earn? What portion of this return is the dividend yield and what portion is the capital gains yield? (hint: think about the growth rate that is associated with preferred stock.)
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