Flashcards in Chapter 7 Formulas preferred shares Deck (13)

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0

## What are dividends

### They are income not capital gains

1

## What happens when u sell shares

### You have a capital gain or loss

2

## What is the total dollar return

### Income from dividends plus capital gain

3

## How do you calculate the price for preferred shares

### Dividends paid per share / required return

4

## How do you calculate the dividends paid per share for preferred shares

### Price x required rate of return

5

## How do you calculate the dividend rate for preferred shares

### Dividends paid per share / par value

6

## How do you calculate the required return for preferred shares

### Dividend per share / selling price

7

## How do you calculate the par value for preferred shares

### Dividends paid per share / dividend rate

8

## How do you calculate the price for a preferred share

### Dividends per share / required return

9

## How do you calculate the risk premium for preferred shares

###
Price / (dividend x par) x 100

Required return - risk free rate

= risk premium

10

## How do you calculate the required return on equity for preferred shares

### Risk free rate + premium

11

## How do you estimate the value of preferred shares

### Dividend amount / required rate of return

12