In the course material, it is stated that preferred stocks are valued as below.
1. Highest 2 ratings of redeemable preferred stock: Purchase Price + Acquisition cost.
2. Highest 2 ratings of perpetual preferred stock: Fair Value
3. Lower rated redeemable and perpetual preferred stock: min (Book value, Fair Value)
But what is the RATIONALE for this? Can VA or someone throw some light on this?
1. Highest 2 ratings of redeemable preferred stock: Purchase Price + Acquisition cost.
2. Highest 2 ratings of perpetual preferred stock: Fair Value
3. Lower rated redeemable and perpetual preferred stock: min (Book value, Fair Value)
But what is the RATIONALE for this? Can VA or someone throw some light on this?
Valuation of preferred stock