14. 15. From what we discussed in class, what is the main reason why long term...

 

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14. 15. From what we discussed in class, what is the main reason why long term interest rates are higher than short term interest rates? a) The real rate of return increases in the future. b) The expectation is inflation will be higher in the future than it is today.** Default risk tends to increase with time. Liquidity risk tends to increase with time The expectation is taxes will be higher in the future than they are today. The Elsinore Co. plans to issue preferred stock with a perpetual annual dividend of $5 per share and a par value of $100. If the required return on this preferred stock is currently 20%, what should be the preferred stock's market value? b) $150 $100 $50 $30 $25** 14. 15. From what we discussed in class, what is the main reason why long term interest rates are higher than short term interest rates? a) The real rate of return increases in the future. b) The expectation is inflation will be higher in the future than it is today.** Default risk tends to increase with time. Liquidity risk tends to increase with time The expectation is taxes will be higher in the future than they are today. The Elsinore Co. plans to issue preferred stock with a perpetual annual dividend of $5 per share and a par value of $100. If the required return on this preferred stock is currently 20%, what should be the preferred stock's market value? b) $150 $100 $50 $30 $25**

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