Asked by Allison
a share of preferred stock of MXT LTD. is expected to pay 1.0 per quarter into indefinite future. the current required annual expected rate of return, k, is 8%. suppose that an investor buys 10 shares today and wants to hold these shares for the next 2 years. find his/her cash flows on a timeline in each of the following situations:
A. interest rates do not change
B. interest rates decline so that the required annual expected rate of return on the preferred stock becomes 6% by the end of year 2
A. interest rates do not change
B. interest rates decline so that the required annual expected rate of return on the preferred stock becomes 6% by the end of year 2
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