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 options are true.

Question

Quizplus · Accepted Answer

Preferred stock is typically valued as a perpetuity since it pays a fixed dividend indefinitely. Options A and B are incorrect as preferred stock dividends are not tax-deductible and the price analysis is not similar to debt since preferred stock has no maturity date. Option D is incorrect as C is the correct answer.

Which Is a Characteristic of the Price of Preferred Stock