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Stock A and B are identical in terms of their expected cash flows. Investors like stock A more than stock B today for reasons unrelated
Stock A and B are identical in terms of their expected cash flows. Investors like stock A more than stock B today for reasons unrelated to expected cash flows. They should pay price today to buy A than to buy B As a result, stock A is expected to have expected return than stock B
Lower, Higher
Higher; Lower
Higher; Higher
Lower, Lower
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