Which of the following is the correct classification for a preferred share when calculating its price?
A)As an annuity
B)As a growing annuity due
C)As a perpetuity
D)As a growing perpetuity

Question

Quizplus · Accepted Answer

Preferred shares are typically classified as perpetuities because they offer a fixed dividend payment that is not expected to change over time. This means that the price of a preferred share can be calculated using the perpetuity formula, which takes into account the dividend payment and the required rate of return.

Which of the Following Is the Correct Classification for a Preferred