Problem:
Several years ago, Bedford Company issued preferred stock with an $8 annual dividend. At the time of original issue, similar preferred stock in the marketplace was sold at a rate of return of 8%, but now yields on similar preferred stock offerings are 6%.
Required:
Question 1: What was the price of the Bedford Corp preferred stock when it was originally issued?
Question 2: What is the price of the preferred stock in the market today?
Note: Provide support for rationale.