why is the Kps lower than Kre?
if Kps relates to prefered stock then, i’d say because it is less risky than a common stock. that is if I understood what you said correctly.
well, that relates to liquidity. how does it make it cheaper?
It’s higher in the liabilities priority, so it’s cheaper.
They pay premium for the right to stay ahead in the line for bankruptcy-claim (if need be) - Dinesh S
because Kre is also comprised of capital gain (expected growth), g, while Kps is only the dividend yield.
because risk and return are positively corelated