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The prices of stocks W and Z are equal, but stock W has a higher required rate of return. Which of the following statements is
The prices of stocks W and Z are equal, but stock W has a higher required rate of return. Which of the following statements is correct? (hint: refer to the constant dividend growth model equation) Stock W must have a higher divident yield than stock Z If stock W has higher dividend yield than stock Z, its expected capital gains yield must be lower than that of stock Z Stock W must have both a higher dividend yield and a higher capital gains yield than stock Z If stock W has a lower dividend yield than stock Z, its expected capital gains yield must be higher than that of stock Z Stock Z must have a higher dividend yield than stock W
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