Company A currently pays an annual dividend of $1.46 a share and plans on increasing that amount by 2.75% annually. Company B currently pays an annual dividend of $1.42 a share and plans on increasing its dividend by 3.10% annually. Assume that both stocks are valued using a constant dividend growth model. Based on this information alone, you know for certain that the stock of Company B has a higher ______ than the stock of Company A.

A. market price

B. dividend yield

C. capital gains yield

D. total return

E. real return

-----------------------------------------------

Which one of the following is the most likely reason why a stock price might not react at all on the day that new information related to the stock's issuer is released? Assume the market is no more than semi-strong form efficient.

A. Company insiders were aware of the information prior to the announcement.

B. Investors do not pay attention to daily news.

C. Investors tend to overreact.

D. The news was positive.

E. The information was widely expected.

-------------------------------------------------------------

Which of the following contribute to a corporation's ability to build large pools of capital? That is, which of the following increase the willingness of investors to provide capital to a corporation?

I. limited liability

II. ease of transferring ownership

III. separation between the life of the business and the life of the owner

IV. double taxation of profits

V. agency costs

A. I only

B. I and III only

C. I, III, and IV only

D. I, II, and III only

E. I, II, III, and V only