Question
Two companies A and B are expected to pay the same dividend $0.95 next year, and have the same long-term constant growth rate of 3.5%.
Two companies A and B are expected to pay the same dividend $0.95 next year, and have the same long-term constant growth rate of 3.5%. If the stock price of company A is smaller than Bs stock price, which of the following is correct according to the constant growth model?
| The future dividends of A will be higher than those of B | ||
| The required return of A is higher than the required return of B | ||
| The required return of B is higher than the required return of A | ||
| The growth rate of B is higher than the growth rate of A | ||
| The future dividends of B will be higher than those of A |
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Smith and Roberson Business Law
Authors: Richard A. Mann, Barry S. Roberts
15th Edition
1285141903, 1285141903, 9781285141909, 978-0538473637
