标题: Reading 60: Equity Valuation: Concepts and Basic Tools-LOS d [打印本页]
作者: 1215 时间: 2011-3-30 11:49 标题: [2011]Session14-Reading 60: Equity Valuation: Concepts and Basic Tools-LOS d
Session 14: Equity Analysis and Valuation
Reading 60: Equity Valuation: Concepts and Basic Tools
LOS d: Calculate the intrinsic value of a non-callable, non-convertible preferred stock.
A preferred stock’s dividend is $5 and the firm’s bonds currently yield 6.25%. The preferred shares are priced to yield 75 basis points below the bond yield. The price of the preferred is closest to:
Preferred stock yield (Kp) = bond yield – 0.75% = 6.25% ? 0.75% = 5.5%
Value = dividend / Kp = $5 / 0.055 = $90.91.
作者: 1215 时间: 2011-3-30 11:49
Calculate the value of a preferred stock that pays an annual dividend of $5.50 if the current market yield on AAA rated preferred stock is 75 basis points above the current T-Bond rate of 7%.
kpreferred = base yield + risk premium = 0.07 + 0.0075 = 0.00775
ValuePreferred = Dividend / kpreferred
Value = 5.50 / 0.0775 = $70.97
作者: 1215 时间: 2011-3-30 11:49
If a preferred stock that pays a $11.50 dividend is trading at $88.46, what is the market’s required rate of return for this security?
From the formula: ValuePreferred Stock = D / kp, we derive kp = D / ValuePreferred Stock = 11.50 / 88.46 = 0.1300, or 13.00%.
作者: 1215 时间: 2011-3-30 11:50
The yield on a company’s 7.5%, $50 par preferred stock is 6%. The value of the preferred stock is closest to:
The preferred dividend is 0.075($50) = $3.75. The value of the preferred = $3.75 / 0.06 = $62.50.
作者: 1215 时间: 2011-3-30 11:50
Assuming a discount rate of 15%, a preferred stock with a perpetual dividend of $10 is valued at approximately:
The formula for the value of preferred stock with a perpetual dividend is: D / kp, or 10.0 / 0.15 = $66.67.
作者: 1215 时间: 2011-3-30 11:50
A company has 8 percent preferred stock outstanding with a par value of $100. The required return on the preferred is 5 percent. What is the value of the preferred stock?
The annual dividend on the preferred is $100(.08) = $8.00. The value of the preferred is $8.00/0.05 = $160.00.
作者: 1215 时间: 2011-3-30 11:50
A company has 6% preferred stock outstanding with a par value of $100. The required return on the preferred is 8%. What is the value of the preferred stock?
The annual dividend on the preferred is $100(.06) = $6.00. The value of the preferred is $6.00/0.08 = $75.00.
作者: 1215 时间: 2011-3-30 11:50
What is the value of a preferred stock that is expected to pay a $5.00 annual dividend per year forever if similar risk securities are now yielding 8%?
作者: 1215 时间: 2011-3-30 11:51
The preferred stock of the Delco Investments Company has a par value of $150 and a dividend of $11.50. A shareholder’s required return on this stock is 14%. What is the maximum price he would pay?
Value of preferred = D / kp = $11.50 / 0.14 = $82.14
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