问一道题：NO.PZ201710200100000304

问题如下：

4. Based on Khan’s estimate of the capitalization rate, Main Company’s preferred stock is:

选项：

undervalued.

fairly valued.

overvalued.

解释：

A is correct.

The value of a share of Main Company’s preferred stock is

$V_0=\frac{D}{r}=\frac{50\times 0.055}{0.06}=\frac{2.75}{0.06}=\frac{2.75}{0.06}=45.83$

The current price of a share of Main Company’s preferred stock is $42, so the stock is currently undervalued.