Question
Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of thefollowingstatements are correct?
Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of thefollowingstatements are correct?
Stocks: X Y
Price: $25 $25
Expected dividendyield 5% 3%
Required Return 12% 10%
A) Stock Y pays a higher dividend per share than Stock X.
B) Stock X pays a higher dividend per share than Stock Y
C) One year from now, stock X should have the higher price.
D) Stock Y has a lower expected growth rate than stock X
E) Stock Y has the higher expected capital gainsyield.
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