From a valuation point of view, what is the difference between a perpetual bond and fixed-rate preferred stock?
There is no difference from a valuation point of view for practical purposes. Both promise an infinitely long annuity of cash flows, and both are evaluated using the “present value of a perpetuity” model. To the extent there is a difference, it is that bonds tend to pay interest semi-annually while stock dividends are usually paid quarterly, so the unit of time in the perpetuity model typically differs between the two analyses.
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