How is the valuation of common stock with zero growth similar to the valution of preferred stock? Preferred stock has a guaranteed dividend, simslar to a zero growth dividend. Both cormmon stock dividends and preferred stock dividends are diffcult to forecast. Both valuations can use the Constant. Growth Dividend Valuation Model. Preferred stock is a riskier investinent than common stock. Question 4 How does a firm's future growth rate affect common stock value? When a company's growth rate is expected to increase, the price investors are willing to pay also increaves. There is no affect on common stock value based on growth rate. There is an inverse relationship between growth rotes and common stock value. Hipher gowth rates require companies to coivert common stock to preferred stock