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The valuation of common stock is considerably more complicated than the valuation of bonds or preferred stocks because: Common stock dividends are normally expected to

The valuation of common stock is considerably more complicated than the valuation of bonds or preferred stocks because:

Common stock dividends are normally expected to grow and not remain constant

The returns from common stocks are generally larger and more certain than the returns from bonds and preferred stocks

The returns can be in annual cash payments or price appreciation, and they are normally expected to grow and not remain constant

The returns can take two forms, i.e. annual cash payments and price appreciation

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