Question: Consider preferred shares with a par value of $40 that entitle the holder to dividends of $4.80 per year. Compute the market price of these shares given the following conditions:

(a) Current dividend yields are 14 percent on comparable issues;

(b) Current dividend yields are 14 percent, but the issue is retractable and can be cashed in at par value in 3 years' time;

(c) Current dividend yields are 10 percent;

(d) Current dividend yields are 10 percent, but the issue can be called at any time at a price of $42; and

(e) The issue is retractable and redeemable, and both options can be exercised at par value at any time.