Question: Ezzell Corporation issued preferred stock with a stated dividend of 10 percent of par. Preferred stock of this type currently yields 8 percent, and the par value is $100. Assume dividends are paid annually.
Q1. What is the value of Ezzell's preferred stock?
Q2. Suppose interest rate levels rise to the point where the preferred stock now yields 12 percent. What would be the value of Ezzell's preferred stock?