Which securities can be valued by dividing the annual dividend by the required rate of return?
A) Low coupon bonds
B) Junk bonds
C) Common stocks
D) Preferred stocks
E) Constant growth common stocks

Question

Quizplus · Accepted Answer

Preferred stocks can be valued by dividing the annual dividend by the required rate of return because they typically pay a fixed dividend, similar to a perpetuity.

Which Securities Can Be Valued by Dividing the Annual Dividend