A preferred stock with a defined maturity date is similar to a bond with a fixed maturity date. Thus, a preferred stock can be valued in a similar fashion to a bond.

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A preferred stock with a defined maturity date has a fixed dividend payment and repayment of principal at maturity, similar to a bond. Therefore, they can be valued using similar methods such as calculating the present value of future cash flows.

A Preferred Stock with a Defined Maturity Date Is Similar