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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 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 thatpreferred stockholders earn? What portion of this return is the dividend yieldand what portion is the capital gains yield? (Hint: Think about the growth rate that is associated with preferred stock.)
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