Question
Which statement is correct about common stocks and preferred stocks? a)The price of a stock is equal to the net present value of its dividends
Which statement is correct about common stocks and preferred stocks?
a)The price of a stock is equal to the net present value of its dividends paid and declared by its Board of Directors.
b) Holding dividends (Do) and its growth rate (g) constant, the stock price will increase if the required return (r) increases.
c)Preferred stocks will always be valued more than common stocks because preferred stock dividends must be paid while common stock dividends do not.
d)Common stock dividends are tax deductible to the stockholder.
e)The dividend yield on the preferred stock is equal to the firm's retention ratio times its Return on Assets (ROA).
f)None of the above statements are correct.
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