B.C. Fisheries Ltd. has convertible preferred shares outstanding currently trading at $31.00. The preferreds pay an annual

Question:

B.C. Fisheries Ltd. has convertible preferred shares outstanding currently trading at $31.00. The preferreds pay an annual dividend of $2.00 and have a redeemable feature effective in two years. It is rated pfd-2, and competitive nonconvertible preferreds of the same risk class carry an 8 percent return. The conversion ratio is 1.25. The common stock is selling for $24.00 per share on the TSX Venture Exchange and pays an annual dividend of $0.60.
a. What is the conversion value of the preferreds?
b. What is the dividend yield on the preferreds?
c. What is the dividend yield on the common shares?
d. Why would an investor not switch to another higher yielding preferred share?
e. Why would an investor not convert to common shares?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...

Fantastic news! We've Found the answer you've been seeking!