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Basic Question 6 of 7
Estimate the value of a fixed rate perpetual preferred stock with a $100 par value, a $15 dividend per annum, and a 12% required rate of return.
User Contributed Comments 5
| User | Comment |
|---|---|
| danlan2 | Par value does not matter. |
| ostrich | It could matter for impairment tests as well as issue of warrants, options, etc. |
| ljamieson | It could, but it doesn't. |
| ashish100 | It doesn't, but it could. |
| UcheSam | For this question, it doesn't. |
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Learning Outcome Statements
calculate and interpret the value of a common stock using the dividend discount model (DDM) for single and multiple holding periods;
CFA® 2025 Level II Curriculum, Volume 3, Module 21.