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Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements
Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?
A | B | |
Price | $25 | $40 |
Expected growth | 8% | 9% |
Expected return | 10% | 12% |
a. | A's expected dividend is $0.75 and B's expected dividend is $1.20. | |
b. | A's expected dividend is $0.50. | |
c. | The two stocks could not be in equilibrium with the numbers given in the question. | |
d. | B's expected dividend is $0.75. | |
e. | The two stocks should have the same expected dividend. |
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