Cost of capital for preferred shares
Is Preferred Dividend/ Price of Preferred Share
Why is that?
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usually preferred shares aren't participating - they just gain a dividend.
But of course there are many different types of preference shares so you have to adjust for the different varieties
it's like valuing a perpetual bond (perp/consol). value of a perp is just the coupon over the interest rate. preference shares can be treated as a perpetual security.. although this assumes the company will be able to pay the same dividend into perpetuity
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