Required Returns of Stocks X and Y Are RX =

question 66

Multiple Choice

required returns of Stocks X and Y are rX = 10% and rY = 12%.Which of the following statements is CORRECT?

• A)If the market is in equilibrium, and if Stock Y has the lower expected dividend yield, then it must have the higher expected growth rate.
• B)If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X.
• C)If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price.
• D)The stocks must sell for the same price.
• E)Stock Y must have a higher dividend yield than Stock X.

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