Question
Stock Q has a required return of 15.00%, while Stock R has a required return of 7.00%. Which of the following statements is CORRECT? a.
Stock Q has a required return of 15.00%, while Stock R has a required return of 7.00%. Which of the following statements is CORRECT?
a. If Stock Q and Stock R have the same dividend yield, then Stock Q must have a lower expected capital gains yield than Stock R.
b. If Stock Q and Stock R have the same current dividend and the same expected dividend growth rate, then Stock Q must sell for a higher price.
c. Stock Q must have a higher dividend yield than Stock R.
d. The stocks must sell for the same price.
e. If the market is in equilibrium, and if Stock Q has the lower expected dividend yield, then it must have the higher expected growth rate.
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