Valuation of common and preferred stock is done using a different valuation formula than that used for bonds.

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Common and preferred stock are considered ownership securities and the valuation formula used takes into account factors such as earnings, dividends, growth potential and the overall market environment. On the other hand, bonds are debt securities and their valuation is based on factors such as coupon rate, yield to maturity and creditworthiness. Therefore, the valuation formulas for common/preferred stock and bonds are different.

Valuation of Common and Preferred Stock Is Done Using a Different