Chapter 7 Formulas preferred shares Flashcards
What happens when u sell shares
You have a capital gain or loss
What are dividends
They are income not capital gains
What is the total dollar return
Income from dividends plus capital gain
How do you calculate the price for preferred shares
Dividends paid per share / required return
How do you calculate the dividends paid per share for preferred shares
Price x required rate of return
How do you calculate the dividend rate for preferred shares
Dividends paid per share / par value
How do you calculate the required return for preferred shares
Dividend per share / selling price
How do you calculate the par value for preferred shares
Dividends paid per share / dividend rate
How do you calculate the price for a preferred share
Dividends per share / required return
How do you calculate the risk premium for preferred shares
Price / (dividend x par) x 100
Required return - risk free rate
= risk premium
How do you calculate the required return on equity for preferred shares
Risk free rate + premium
How do you estimate the value of preferred shares
Dividend amount / required rate of return
How donyiubdeterminrbtgdvrequited rate of return
Dividend amount / selling price
