Attempts: Score: 16 Atteation: Due to a bug in Google Chrome, this page may not

Question

Attempts: Score: 16 Atteation: Due to a bug in Google Chrome, this page may not function correctly. Click here to learn more, 10. Preferred stock preferred stock is often called a hybrd seaurity because it has some characteristics thet 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.O It has a par, or face, value. Debt Common stoc Consider the case of cold Goose Metal Works: Cold Goose Metal works pays an annual dividend rate of 19 20% on its preferred stock that currently returns 25.73% and has a par velue of $100 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 Cold Goose's preferred stock? O $102.98 per share O $80.59 per share O $65.67 per share O $74.62 per share Suppose that there is high unemployment, which causes interest rates to fall, which in tum puls the preferred dividend yield to 22 13%. Then the value of cold Goose's preferred stock will because interest rates (and security returns) and security values are to This is related o Graded

Explanation / Answer

Answer:

Market Price of stock = Required Dividend/Expected return

= .1920 * 100/.2573

= $74.62

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