Mini Case: Bond & Stock Valuation."
Please respond to the following:
• Determine the yield spread between the corporate bond and the Treasury bond.
• Alternatively, you are considering a purchase of Laissez-Faure's preferred stock. Assume that the preferred stock has a current market price of $42, a par value of $50, and dividend amount of 10% of par. Your required rate of return for investments of this type is 12.5%. Determine if you be willing to buy the firm's preferred stock. Why or why not?