1) X?Tech issued preferred shares many years ago

1) X?Tech issued preferred shares many years ago. They carry a fixed dividend of $14 per share. With the passage of time, yields have soared from the original 10 percent to 17 percent (yield is the same as required rate of return).   

a. What was the original issue price? (Round the final answer to 2 decimal places.)

Original price of preferred share        $  

b. What is the current value of a X?Tech preferred share? (Round the final answer to 2 decimal places.)     

Current price of preferred share _____       $        

c. If the yield on the Preferred Stock Index declines, how will the price of these preferred shares be affected?

multiple choice

• The price of preferred stock will increase.
• The price of preferred stock will decrease.

2) Martin Shipping Lines issued bonds ten years ego at $1,000 per bond. The bonds had a 30-year life when issued, with semiannual payments at the then annual rate of 10 percent. This return was In line with required returns by bondholders at that point, as described below: 
Roal vat., of ruturn Inflation premium Riak premium 
Total return 1011 
Assume that today the inflation premium is only 2 percent and Is appropriately reflected In the required return (or yield to maturity) of the bonds. 
Compute the new price of the bond. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answer to 2 decimal places.) 
New price of the bond S 

3) The Victoria Telephone Company has a 61,000 par value bond outstanding that pays 16 percent Interest wtth annual payments. The current yield to maturity on such bonds In the market Is 17 percent. 
Compute the price of the bonds for these maturity dates (Use a Financial calculator to arrive at the answers. Do not round Intermediate calculations. Round the final answers to 2 decimal places.)