Biology Forums - Study Force

Montreal Financing has preferred shares with a stated value of $20 outstanding. These shares pay $1.60 in dividends annually.

a)	What is the market price of these shares if the current market yield is 11%?

b)	What is the market price of these shares if the current market yield is 11% and

the issue is retractable in five years at the stated value?

c)	What is the value of this retractable feature? Why does it have value?

d)	What is the market price of these shares if the issue is immediately redeemable

and retractable at stated value?

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