What should be the prices of the following preferred stocks if comparable securities yield 7 percent? Why are the valuations different? MN, Inc., $8 preferred ($100 par) Ch, Inc., $8 preferred ($100 par) with mandatory retirement after 20 years.
What should be the prices of the following preferred stocks if comparable securities yield 7 percent? Why are the valuations different? MN, Inc., $8 preferred ($100 par) Ch, Inc., $8 preferred ($100 par) with mandatory retirement after 20 years.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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please dont answer in excel, i dont understand that yet, equations or worded answers please, thanks)
What should be the prices of the following
- MN, Inc., $8 preferred ($100 par)
- Ch, Inc., $8 preferred ($100 par) with mandatory retirement after 20 years.
Expert Solution
Step 1
The computation as follows:
1)
With a yield of 7%, price of MN Incorporation, would be:
Hence, the price of MN incorporation is $114.29.
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