Stocks A and B have the following date. Assuming the stock market is efficient a

Question

Stocks A and B have the following date. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?
Stock A Stock B Required return: 10% 12% Market price: $25 $40 Expected growth: 7% 9%
CHOOSE WHICH OPTION IS CORRECT A. These two stocks should have the same price B. These two stocks must have the same dividend yield C. These two stocks should have the same expected return D. These two stocks must have the same expected capital gains yield E. These two stocks must have the same expected year end dividend Stocks A and B have the following date. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?
Stock A Stock B Required return: 10% 12% Market price: $25 $40 Expected growth: 7% 9%
CHOOSE WHICH OPTION IS CORRECT A. These two stocks should have the same price B. These two stocks must have the same dividend yield C. These two stocks should have the same expected return D. These two stocks must have the same expected capital gains yield E. These two stocks must have the same expected year end dividend
Stock A Stock B Required return: 10% 12% Market price: $25 $40 Expected growth: 7% 9%
CHOOSE WHICH OPTION IS CORRECT A. These two stocks should have the same price B. These two stocks must have the same dividend yield C. These two stocks should have the same expected return D. These two stocks must have the same expected capital gains yield E. These two stocks must have the same expected year end dividend

Explanation / Answer

B. These two stocks must have the same dividend yield

A's expected dividend is $0.75 and B's expected dividend is $1.20

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