Question
Stock A has a required return of 9.00%, while Stock B has a required return of 6.00%. Which of the following statements is CORRECT? a.
Stock A has a required return of 9.00%, while Stock B has a required return of 6.00%. Which of the following statements is CORRECT?
a. If the market is in equilibrium, and if Stock A has the lower expected dividend yield, then it must have the higher expected growth rate.
b. If Stock A and Stock B have the same dividend yield, then Stock A must have a lower expected capital gains yield than Stock B.
c. If Stock A and Stock B have the same current dividend and the same expected dividend growth rate, then Stock A must sell for a higher price.
d. Stock A must have a higher dividend yield than Stock B.
e. The stocks must sell for the same price.
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