This paper presents and tests a valuation approach that was derived from economic price theory to arrive at the value (e.g. price) of preferred stock. Since it has been some time since preferred stock has been common issued, this paper also explains some of the features of preferred stock and, in particular, discusses appropriate Internal Revenue Ruling 83-120 with respect to preferred stock valuation. That Revenue Ruling is a minimal guide to lead to the valuation of this important class of stock.

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