Preferred stock with a 10% dividend would be valued the same as a common stock with a zero dividend growth rate.

Question

Quizplus · Accepted Answer

This statement is false. Preferred stock with a 10% dividend would be valued higher than a common stock with a zero dividend growth rate because the preferred stock has a guaranteed dividend payment, whereas the common stock's dividend could potentially decrease or be eliminated in the future.

Preferred Stock with a 10% Dividend Would Be Valued the Same