How is preferred stock affected by a decrease in the required rate of return?

Question

Quizplus · Accepted Answer

Preferred stock is valued based on its expected dividends and the required rate of return. A decrease in the required rate of return would make the stock more attractive to buyers, thus increasing demand and driving its value up. As a result, the value of a share of preferred stock increases. The dividend and dividend yield would remain the same, as they are fixed and do not change with the required rate of return.

How Is Preferred Stock Affected by a Decrease in the Required