Preferred Stock Pays a Constant Dividend and Is Valued as a Perpetuity

question 79

True/False

Preferred stock pays a constant dividend and is valued as a perpetuity.

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Definitions:

Risk-Free Return

The hypothetical earnings from an investment that carries no risk, typically illustrated by the return on government bonds, such as U.S. Treasury bills.

Jensen Measure

A performance metric that evaluates investment manager's returns excess compared to what could have been earned on a risk-adjusted basis.

Standard Deviation

A measure of the dispersion or variation in a set of values, indicating how much the values deviate from the mean.

Beta

Beta is a measure of a security's volatility in relation to the overall market, indicating how much a security's price is expected to move compared to market movements.