Since the issuers of preferred stock promise to pay investors a fixed dividend, usually quarterly, forever, these are the most important perpetuities in the financial markets.

Question

Quizplus · Accepted Answer

Perpetuities refer to investments that promise a fixed cash flow stream that continues indefinitely. Since preferred stock pays a fixed dividend to investors forever, it qualifies as a perpetuity. Hence, the statement is true.

Since the Issuers of Preferred Stock Promise to Pay Investors