Question

Earley Corporation issued perpetual preferred stock with
an 8% annual dividend. The stock currently yields 7%, and its par value is $100.
a. What is the stock’s value?
b. Suppose interest rates rise and pull the preferred stock’s yield up to 9%. What is its
new market value?

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Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
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ISBN: 9781337902571
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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