A Common Stock That Pays a Constant Dividend Can Be

question 68

Multiple Choice

A common stock that pays a constant dividend can be valued as if it were

• A) a corporate bond.
• B) a stock paying a growing dividend.
• C) preferred stock.
• D) a discount bond.

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Definitions:

Fair Value

The estimated market value of an asset, liability, or financial instrument at a given point in time.

Goodwill Impairment

A decrease in the value of a company's goodwill asset, indicating that the value of an acquired company's brand, customer base, or proprietary technology has declined.

Depreciation Expense

The allocation of the cost of a tangible asset over its estimated useful life to account for wear and tear, obsolescence, or decay.

Coupon Rate

The interest rate that a bond issuer will pay to a bondholder.