A firm contemplates issuing 10,000 shares of $100 par value preferred stock. The preferred stock promises a

Question:

A firm contemplates issuing 10,000 shares of $100 preferred stock. The preferred stock promises a $4 per share annual dividend. The firm considers making this preferred stock callable, or convertible, or subject to mandatory redemption. Will the issue price be the same in each of these three cases? Explain.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...