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Calculate the price for both preferred stocks

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Reference no: EM132518132

Blu Investments Limited has two preferred stocks on the market. The stocks have dividends and yield as presented in the table below.The par value for both preferred stocks is $100.

Name              Dividends                     Yield

Series A                8%                     12%

Series B                6.5%                  10%

Question i.) Calculate the price for both preferred stocks?

Question ii.) If the yield of preferred shares increased to 14% for Series A and 12% for Series B, what is the new price of both stocks?

Question iii.) How did the increase in interest rates affect the price of the preferred shares? What is the relationship between interest rates and bond prices?

Reference no: EM132518132

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