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 3 years ago
When I want to compute beta levered should I treat preferred shares as part of debt or equity?
 3 years ago
When I want to compute beta levered should I treat preferred shares as part of debt or equity?

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business1
 3 years ago
Best ResponseYou've already chosen the best response.1since nonpayment of dividend to preferred holders cannot force a company into bankruptcy must be treated as equity.

Aswath
 3 years ago
Best ResponseYou've already chosen the best response.0Only if you want to treat preferred equity as equity all the way through. Actually, the best thing to do is to treat it as a third source of capital, with the preferred dividend yield as the cost.

business1
 3 years ago
Best ResponseYou've already chosen the best response.1to calculate wacc under same logic, would it = (cost of debt x debt/capital) + (cost of common x common/capital) + (cost of preferred x preferred/capital)? if so, would you than also consider including into equation cost of convertible stock, cost of stock options, etc? thanks.
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