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On the Pricing of Preferred Stock

Published online by Cambridge University Press:  06 April 2009

Eric H. Sorensen  and
Clark A. Hawkins
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Extract

Historically, preferred stock ranks well below common stock and bond issues as a source of financing in the private capital market. Relative to issuance of bonds, the issuance of preferred stock burdens the issuer with a fixed financing cost without benefitingthe issuer with the tax deductability associated with interest payments.

Type
Security Valuation and the Sinking Fund Provision
Information
Journal of Financial and Quantitative Analysis , Volume 16 , Issue 4 , November 1981 , pp. 515 - 528
Copyright
Copyright © School of Business Administration, University of Washington 1981

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References

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