A common stock with an expected dividend growth rate of zero would be valued in the same way as preferred stock,that is,the expected dividend divided by the required return.

Question

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A common stock with expected dividend growth rate of zero implies that the dividend payments will remain constant over time. In this scenario, the stock can be valued in the same way as preferred stock(using the expected dividend divided by the required return) since there is no growth in dividends to consider.

A Common Stock with an Expected Dividend Growth Rate of Zero