1. Which of the following statements is CORRECT?
2. a.
3. Preferred stock is less risky than common stock, but more risky than debt.
4. b.
5. Public perception and reputation do not affect stock prices, which are strictly a function of dividends and required returns.
6. c.
7. Common stock valuation can be based on the present value of future dividends or alternatively on the present value of the company's future net income.
8. d.
9. Preferred stock and common stock issued by the same firm will have the same required return because the riskiness of the company cash flows is the same for both securities.