Which of the Following Formulas Is Appropriate to Find the Value

question 4

Multiple Choice

Which of the following formulas is appropriate to find the value of preference shares with a fixed dividend?

• A)Value of preference shares = Annual Preferred Shares Dividend (1+ growth rate)/Market's Required Yield on Preferred Shares
• B)Value of preference shares = Annual Preferred Shares Dividend (1+ growth rate)/Market's Required Yield on Preferred Shares - growth rate
• C)Value of preference shares = Annual Preferred Shares Dividend/Market's Required Yield on Preferred Shares
• D)Value of preference shares = Annual Preferred Shares Dividend/Investor's Required Yield on Preferred Shares

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Definitions:

Government Securities

Debt instruments issued by a government to raise funds from the public.