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What was the original issue price

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North Pole Cruise Lines issued preferred stock many years ago. It carries a fixed dividend of $10 per share. With the passage of time, yields have soared from the original 12 percent to 10 percent (yield is the same as required rate of return).

a. What was the original issue price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What is the current value of this preferred stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. If the yield on the Standard & Poor's Preferred Stock Index declines, how will the price of the preferred stock be affected?

  • The price of preferred stock will increase.
  • The price of preferred stock will decrease.

Reference no: EM132379767

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