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Strategies & Market Trends : Value Investing

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To: Jurgis Bekepuris who wrote (41250)	1/30/2011 10:42:33 AM
From: Jurgis Bekepuris	Read Replies (1) of 78525

Somebody asked me in private why MHR-C yield to maturity is ~7.5 and not 9.X% that you get dividing $2.5625/$25.8. Here's the answer: At maturity you only get $25 for the pref, while you are paying $25.8 for it now. So you lose $.8 that you have to make up from divvies. Your yield to maturity for remaining 10 months is about ($25 + $2.5625/12*10) - $25.8 / $25.8. The actual formula is much more complicated due to discounting and monthly accumulation + possible reinvesting, so you have to plug in numbers into one of the yield-to-maturity online calculators. Here's one, though it has 1 year minimum for calculations: moneychimp.com Your only chance to get better yield is that MHR-C would not be called in December. The longer it's not called the better your yield becomes. If it's called in Dec, the yield rather sucks.

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