Suppose interest rates rise and pull the preferred stocks, Finance Basics

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Suppose interest rates rise and pull the preferred stocks

Question: Earley Corporation issued perpetual preferred stock with a 11% annual dividend. The stock currently yields 7%, and its par value is $100.

a. What is the stock's value? Round your answer to two decimal places.

b. Suppose interest rates rise and pull the preferred stock's yield up to 11%. What is its new market value? Round your answer to two decimal places.

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Finance Basics: Suppose interest rates rise and pull the preferred stocks

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