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    cnichols33's Avatar
    cnichols33 Posts: 9, Reputation: 1
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    #1

    May 19, 2007, 10:04 AM
    Accounting (preferred stock value)
    Co. X issued preferred stock many yrs ago. It carries a fixed dividend of 6$ per share. Over time, yields have soared from the original 6% to 14%

    A. what is the original issue price?
    B. What is the current value of the 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?

    Kind Regards,

    Candy
    bunnyKutty's Avatar
    bunnyKutty Posts: 60, Reputation: 5
    Junior Member
    		  
    #2

    May 19, 2007, 10:27 AM
    1)
    cost of preferred stock kp = D/SV
    6% = 6/SV
    SV = 6/6%
    SV = price of preferred stock = $100
    2)
    14% = 6/SV
    SV = 6/14%
    Price of preferred stock = $42.86
    3)
    no idea
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