Which is a characteristic of the price of preferred stock?
A) Since preferred stock dividends are fixed, they are tax deductible.
B) Because preferred stock has no maturity, the price analysis is similar to that of debt.
C) Preferred stock is valued as a perpetuity.
D) None of these.

Question

Quizplus · Accepted Answer

The characteristic of the price of preferred stock is that it is valued as a perpetuity. This means that the stock's value is based on the fixed dividend payments it will receive indefinitely, not on any maturity date or tax-deductible status. Therefore, option C is the correct answer. Options A and B are incorrect because they contain inaccurate information about preferred stock dividends and their analysis. Option D is incorrect because it is not a valid choice.

Which Is a Characteristic of the Price of Preferred Stock