Computing "K"Thomas's Inc. issued the 6% preferred stock at a price of $105 last year, thispreferred stock is currently priced at $150.95. If Michaels wishes to sell somenew preferred stock at par, what rate should they assign to the new shares?The stock has a notional face value of $100.

Dividend = Face Value × Dividend rate at issueDividend = $100 × 6% = $6Current preference stock…

Answered: Thomas's Inc. issued the 6% preferred…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 14P

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Thomas's Inc. issued the 6% preferred stock at a price of $105 last year, this preferred stock is currently priced at $150.95. If Michaels wishes to sell some new preferred stock at par, what rate should they assign to the new shares? The stock has a notional face value of $100.