Home › BAF (Bachelor of Accounting & Finance) › Financial Management › Stock Valuation › Because that dividend stream is constant, prefer…
Because that dividend stream is constant, preferred stock is well valued using the:
AConstant growth demand model
BConstant growth dividend model
CConstant growth deposit model
DConstant growth discount charge
Answer & Solution
Correct answer: B. Constant growth dividend model
1. The dividend does not change.
2. The model fits that pattern.
3. It is the constant growth dividend model.
_Source: OpenStax Principles of Finance 2e, Chapter 11, Stocks and Stock Valuation._
Related questions
In the weakest of those forms, prices already reflect all:The three forms of market efficiency identified are strong, semi-strong and:The steady dividend on preferred stock makes it seem more like:Many firms issue preferred stock that can later be exchanged for ordinary shares. That is The word preferred refers to those shareholders receiving dividends before:Unlike bonds, preferred stock has no:Equity that offers preferential claims in ownership is:A measurement of the total value of a company, used in merger decisions, is: