Corporate Finance Q95

0. RBS Insurance Limited issued to retail investors a fixed-rate perpetual preferred stock four years ago at par value of $10 per share with a $2.85 dividend. If the company had issued the preferred stock today, the yield would be 8.5 percent. The current value of the stock is:

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Option : B
Explanation : The company can issue preferred stock today at 8.5%. Pp = $2.85 / 0.085 = $33.53.

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