North Pole Cruise Lines issued preferred stock many years ago. It carries a fixed dividend of $6 per share. With the passage of time, yields have soared form the original 6% to 14% (yield is the same as required rate of return.)

a. What was the original issue price?
b. What is the current value of this preferred stock?
c. If the yield on the Standard & Poor’s Preferred Stock Index declines, how will the price of the preferred stock be affected?

Ditto what I said on your other post about doing homework.

:rolleyes:

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Originally Posted by morgaine300

Ditto what I said on your other post about doing homework.

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I'm trying to write curriculum for a class. I do not know how to figure this problem. Thanks for your help and healthy comment.

Rob, the best way to attack this one is for you to explain what part(s) of the problem is throwing you the curve. In other words, show what computations you've attempted thus far, and where you're getting stuck.

From that starting point, this board can provide the necessary guidance to help you understand and calculate the answer correctly.