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    Discuss a stock valuation method; why managers interested

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    Discuss the various types of stocks (common stock, preferred stock) and some of the valuation methods used. Discuss a stock valuation method and why it would be interesting to a financial manager of a company.

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    Preferred stock: Shares which have a maximum dividend per share prior to common shareholders getting anything. These shares may or may not have voting rights or other special features such as cumulative or call features. A popular special feature is "convertible preferred" which means that the stock can be traded for common stock in the future. This is nice because if the common dividend gets bigger than the preferred dividend, you can trade up.

    The value of preferred stock is considered fairly even because once the dividends declared are routinely over the maximum per share, the cash flow per share is stable over time. You can value the stock based on a ...

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