1. Wally's War Duds has a preferred share issue outstanding with a current price of $26.57. The firm is expected to pay a dividend of $1.86 per share a year from today. What is the firm's cost of preferred equity? Round your final answer to nearest percentage.
A. 6.5%
B. 7.0%
C. 7.5%
D. 8.0%
2. A bond with a 7-year duration is worth $1,088, and its yield to maturity is 8.8%. If the yield to maturity falls to 8.56%, you would predict that the new value of the bond will be approximately
$1,085.39
$1,088.00
$1,090.61
$1,104.76