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A. overpriced and will quickly decline
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C. underpriced and should rise quickly
D. selling at a 4% premium over conversion value
Answer: C
Explanation:
underpriced and should rise quickly. The parity price for the common stock is about $49.38 -
determined as:50 / 47.50 = 1.053 52 / 1.053 = 49.38 Since the common stock is trading at 51, the
preferred is underpriced.
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