1 a 5 preferred stock with a par of 100 is currently for, Ask an Expert

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1. A 5% preferred stock with a par of 100 is currently for $105 with a current yield (cost) of 4.76%. Investment bankers advised the firm that a new preferred if issued will require a yield (cost to the firm) of 6%. What is the floatation percentage?

2. Consider the following two bond issues.

Bond R: 6% 10-year bond

Bond S: 6% 15-year bond

Neither bond has an embedded option. Both bonds are trading in the market at the same yield.

Which bond will fluctuate more in price when interest rates change? Why?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92820790

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