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Preferred dividends are paid from earnings. All else being equal, is a firm more or less likely to issue preferred stock if its tax rate increases? Doesn't matter Less likely More likely Consider the case of THC Endowment: THC Endowment is an institutional investor and owns preferred stocks worth a \20 stake in Hack Wellington Co. Hack Wellington Co. paid out dividends of \\( \\$ 205,800 \\) to THC Endowment this year. Hack Wellington Co. had issued perpetual preferred stock with a par value of \\( \\$ 100 \\) and pays a(n) \9.80 annual dividend. Investors' required return on Hack Wellington Co.'s preferred stock is \13.13, and the tax rate for both the companies is \30. Based on the information given, calculate the following: Hack Wellington Co. also issued preferred stock whose dividends varied with the interest rate on the T-bill. Though this feature was intended to keep the price of the stock stable, the fluctuations in the Treasury yields between the dividend rate change dates led to price instability, and several institutional investors reallocated their investments from this preferred stock to other short-term investments. What kind of preferred stock did Hack Wellington Co. issue? Adjustable rate preferred stock Market auction preferred stock

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