Preferred Stock Yield-To-Maturity: Durango Water Works Has an Outstanding Issue

question 30

Multiple Choice

Preferred Stock Yield-to-Maturity: Durango Water Works has an outstanding issue of preferred stock that has a par (maturity value) of $75.00. The stock, which pays a quarterly dividend of $1.10, will be retired by the firm in 20 years. If the preferred stock is currently selling for $68.00, what is the preferred stock's yield-to-maturity? (Round off to the nearest 0.01%)

• A) 6.72%
• B) 5.64%
• C) 4.28%
• D) 7.73%

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Definitions:

Systematic Desensitization

A therapeutic technique used to reduce phobias and anxiety through gradual exposure to the feared object or situation combined with relaxation exercises.

Psychodynamic Therapy

A therapeutic approach that focuses on understanding and resolving the psychological forces underlying human behavior and emotions, often by exploring past experiences.

Exposure and Response Prevention

A behavioral therapy technique for treating anxiety disorders that involves exposure to the feared object or context without the ritualistic response.

Anorexia Nervosa

An eating disorder characterized by an obsessive fear of gaining weight, leading to severe restrictions on food intake and often resulting in dangerous weight loss.