Question $22$

$4$ pts

In the valuation of common stock, the simple annuity and perpetuity formulas used in the valuation of bonds and preferred stock are not generally applicable because:

Investors buy common stock for much different reasons than they buy bonds or preferred stock

Common stock difidends are normafly expected to grow over time, rather than being constaint as are parments on most bonds and most preferred stock

Unlike bonds and preferred stock, common$-$stock is a short term investment.

Returns accruing to common stock should never be capitalized $($discounted$)$ in order to determine a price.