Barnes Air Conditioning Inc has two classes of preferred stock floating rate preferred stock and straight (normal) preferred stock Both issues have a par value of $100 The floating rate preferred stock pays an annual dividend yield of 4 percent, and the straight preferred stock pays 5 percent Since...

Barnes Air Conditioning Inc a The floating rate preferred st ...

Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight (normal)

Question:

Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight (normal) preferred stock. Both issues have a of $100. The floating-rate preferred stock pays an annual yield of 4 percent, and the straight preferred stock pays 5 percent. Since the issuance of the two securities, interest rates have gone up by 2.50 percent for each issue. Both securities will pay their year-end today.
a. What is the price of the floating-rate preferred stock likely to be?
b. What is the price of the straight preferred stock likely to be?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... 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,...