Cost of Preferred Stock

Home » CMA Glossary Term » Corporate Finance » Cost of Preferred Stock

Cost of Preferred Stock refers to the required return by investors holding a company’s preferred shares, representing the dividend rate necessary to attract and retain investment. It is calculated by dividing the annual preferred dividend by the market price per share. This cost is crucial for determining a firm’s weighted average cost of capital (WACC) and impacts financial decision-making.

CMA Exam Academy 16-Week Accelerator Program