Question
Preferred stock valuation uses a constant dividend while common stock valuation uses either a constant dividend growth or a variable dividend growth. Why is this
Preferred stock valuation uses a constant dividend while common stock valuation uses either a constant dividend growth or a variable dividend growth. Why is this statement true?
a) Preferred stock receives just as much dividends as common stock.
b) Since not many companies use preferred stock, they just made the calculations easier.
c) Preferred stock receives dividends based on a set amount where common stock can receive dividends either equalto preferred stock or based on earnings.
d) Common stock dividends usually grow faster than preferred stock dividends.
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