The market price of a preferred stock will be affected by:

Question

Quizplus · Accepted Answer

The market price of a preferred stock is affected by several factors such as the dividend rate, the chance that the company will not operate profitably, and the level of interest rates. The dividend rate is a crucial factor as it determines the income that the preferred stockholder will receive. If the dividend rate is high, the preferred stock will have a higher price in the market. On the other hand, if the company faces difficulties and lower profits, the value of preferred stock can decline. Additionally, the level of interest rates in the market also affects the price of preferred stock as higher interest rates make them less attractive as an investment option. Therefore, all of the factors mentioned will have an impact on the market price of preferred stock.

The Market Price of a Preferred Stock Will Be Affected