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3. Preferred Stock Valuation

d. calculate the intrinsic value of a non-callable, non-convertible preferred stock;

What are the four basic types of preferred stock? 1. Cumulative - if the company withholds any part of expected dividends, these payments are in arrears and must be settled before any other dividends 2. Callable - gives the issuer the right to redeem the stock at a date and price outlined in the prospectus 3. Convertible - option for the preferred stockholder to convert the shares into a fixed number of common shares at any point after a pre-determined date 4. Participating - offers the investor the opportunity to earn a dividend beyond the stated rate as outlined in the prospectus

What is a retractable preferred share? A retractable preferred share allows an investor to redeem the share whenever the investor wants. As a result, the value of the preferred share is increased.