Chapter 8. Security Valuation. In general, the intrinsic value of an asset = the present value of the stream of expected cash flows discounted at an appropriate required rate of return. Preferred Stock. A hybrid security : it’s like common stock - no fixed maturity.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
A hybrid security:
kcs - g
D0 = $5, so D1 = 5 (1.10) = $5.50
kcs - g .15 - .10
Vcs = = = $110Example
kcs - g
k = ( ) + gExpected Return on Common Stock
kcs = ( ) + g
kcs = ( ) + .05 = 16.11%