Substituting current market price (P₀) for intrinsic value (V) in preferred stock valuation, we have

P₀ = D_p/k_p

where D_p is still the stated annual dividend per share of preferred stock, but k_p is now the market required return for this stock, or simply the yield on preferred stock. Rearranging terms allows us to solve directly for the yield on preferred stock:

k_p = D_p/P₀

To illustrate, assume that the current market price per share of Acme Zarf Company's 10 percent, $100-par-value preferred stock is $91.25. Acme's preferred stock is therefore priced to provide a yield of

k_p = $ 10/S91.25 = 10.96%