If a preferred stock is callable, then the calculation of the cost of preferred stock financing is ____.

Question

Quizplus · Accepted Answer

CCallable preferred stock means the issuing company has the right to repurchase the stock at a predetermined price after a certain date, similar to callable bonds. Therefore, the cost calculation involves considering the dividend and the price, less any flotation costs, similar to bond financing.

If a Preferred Stock Is Callable, Then the Calculation of the Cost