Because most preferred stocks are perpetuities,their value can be determined by dividing the annual dividend by an investor's required return.

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Preferred stocks are usually perpetual, which means they have no maturity date. Therefore, their value can be determined by dividing the annual dividend by an investor's required return. This is because the dividends on preferred stocks are fixed, just like bonds, and are paid out regularly to the investor as long as the stock is held.

Because Most Preferred Stocks Are Perpetuities,their Value Can Be Determined