However, this is not to say there is no risk. The risk of a bond, and therefore, its required return is affected by the chance that the 'floater' of the bond will default. In addition, as inflation rises the value of a bond decreases. Given this information, it can be reasoned that the value of a bond is equal to the value of it's discounted coupon payments plus the discounted par value of the bond. Preferred stock is often compared to a glorified bond.
Preferred stocks pay a fixed dividend into perpetuity.
However, they are not required to pay this dividend, they will pay it assuming there is a residual income. Since there is no growth rate, the only factors taken into account are the dividend and the interest rate. You may practice with valuating preferred stock by clicking the 'Pref Stock' button to your right.