Stock X has a required return of 10%, while Stock Y has a required return of 12%

Question

1. Stock X has a required return of 10%, while Stock Y has a required return of 12%.Which of the following statements is CORRECT? Answer A. The stocks must sell for the same price. B. If the market is in equilibrium, and if Stock Y has thelowerexpected dividend yield, then it must have thehigherexpected growth rate. C. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. D. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. E. Stock Y must have a higher dividend yield than Stock X.
   

1. Stock X has a required return of 10%, while Stock Y has a required return of 12%.Which of the following statements is CORRECT? Answer A. The stocks must sell for the same price. B. If the market is in equilibrium, and if Stock Y has thelowerexpected dividend yield, then it must have thehigherexpected growth rate. C. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. D. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. E. Stock Y must have a higher dividend yield than Stock X.
   

Stock X has a required return of 10%, while Stock Y has a required return of 12%.Which of the following statements is CORRECT? Answer A. The stocks must sell for the same price. B. If the market is in equilibrium, and if Stock Y has thelowerexpected dividend yield, then it must have thehigherexpected growth rate. C. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. D. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. E. Stock Y must have a higher dividend yield than Stock X.
Stock X has a required return of 10%, while Stock Y has a required return of 12%.Which of the following statements is CORRECT? The stocks must sell for the same price. The stocks must sell for the same price. If the market is in equilibrium, and if Stock Y has thelowerexpected dividend yield, then it must have thehigherexpected growth rate. If the market is in equilibrium, and if Stock Y has thelowerexpected dividend yield, then it must have thehigherexpected growth rate. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. Stock Y must have a higher dividend yield than Stock X. Stock Y must have a higher dividend yield than Stock X. A. The stocks must sell for the same price. B. If the market is in equilibrium, and if Stock Y has thelowerexpected dividend yield, then it must have thehigherexpected growth rate. C. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. D. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. E. Stock Y must have a higher dividend yield than Stock X.

Explanation / Answer

Hi,

Please ignore my previous answer. By mistake I mentioned it as C.

Option B should be the correct answer.

Thanks.

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