# How to Calculate Market Values of Preferred Shares

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Preferred stock is a security that has properties of both equity and debt. Preferred stock is also known as preferred shares or preferreds. This hybrid security has a higher rank than common stock but is lower than bonds. Preferred stock typically pays dividends before any dividends are paid to common-stock holders. The dividend amount and rate of return makes it possible for investors to calculate the current market value of any preferred shares that they may own.

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## Step 1

Use a financial website, like Morningstar or Yahoo Finance (see Resources below), to get information on the dividend amount and the required rate of return for the preferred shares. If you manage your preferred shares in an online investment account, you can also get these details from your account.

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## Step 2

Convert the required rate of return from a percentage into a number with a decimal point. For example, if the required rate of return is 8.5 percent, it would convert to 0.085.

## Step 3

Calculate the market value of your preferred shares by dividing the dividend amount by the required rate of return. The formula is "market value = dividend/ required rate of return." The amount that you get will be the value per share of your preferred shares.

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