Charlene Weaver likes to speculate with preferred stock by trading on movements in market interest rates. Right now, she believes the market is poised for a big drop in rates.

Accordingly, she is thinking seriously about investing in a certain preferred stock that pays \($7\) in annual dividends and is currently trading at \($75\) a share. What rate of return will she realize on this investment if the market yield on the preferred share drops to 6.5% within 2 years? What if the drop in rates takes place in 1 year?