We compare three alternative models for valuing fixed-rate preferred stocks: the perpetuity model and two models derived from option pricing theory. The parameters necessary to use these models were first approximated using estimation samples of new-issue and seasoned preferred stocks, and...

This study examines the assumable loan value in creative financing. It is shown that, even in perfect markets and with an identical risk assigned to first and secondary mortgages on the same house, the assumable loan value as determined by the cash equivalence method is overstated. The impact of...