Wernam Hogg Class a Preferred Shares Have a Par Value

question 93

Multiple Choice

Wernam Hogg Class A preferred shares have a par value of $100 and offer an annual dividend at 0.8% of par value.Wernham Hogg Class A Preferred shares paid their annual dividend yesterday and are currently priced at $16 to yield 5%.The central bank is threatening to tighten monetary policy.The chief economist predicts that all interest rates will rise by 2% over the coming year (the yield on the Wernham Hogg Class A Preferred shares will also rise to 7%) .If you sell your Wernham Hogg Class A Preferred shares in one year after the interest rate increase (and after the next dividend) ,then what return will you have earned on the investment assuming that you bought at today's price?

• A) -89.7%
• B) -28.6%
• C) -23.6%
• D) 5.0%
• E) 21.3%

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Definitions:

Management by Objectives

A management model that involves setting clear, specific objectives agreed upon by both management and employees to guide performance and assess achievements.

Zero-Based Budgeting

A budgeting approach where all expenses must be justified for each new period, starting from a "zero base" and assessing needs and costs from scratch.

Strategic Goal Setting

The process of defining specific, measurable, achievable, relevant, and time-bound objectives that align with an organization’s strategic direction.

Date of Completion

The specified date when a project, task, or assignment is expected to be finished.