Which of the following statements concerning preferred stock is most correct?

Select one:

a. Preferred stock dividends are calculated as a percentage of common stock dividends, although the preferred stock dividends must be paid first.

b. If a corporation issues 4% preferred stock with a par value of $100, the dividend will increase by 4% per year.

c. Preferred stock dividends are typically the same each year, allowing a preferred stock to be valued as a perpetuity.

d. Preferred stock is valued the same as zero coupon bonds because the cash flow patterns are similar.

Keyes Corporation preferred stock pays an annual dividend of $5 per share. Which of the following statements is true for an investor with a required return of 8%?

Select one:

a. The value of the preferred stock is $4 per share because of the 8% required return

b. The value of the preferred stock is $5 because the dividend is fixed at $5 each year

c. The value of the preferred stock is $40.00 per share

d. The value of the preferred stock is $62.50 per share