Stocks a and B Have the Following Data

question 8

Multiple Choice

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) The two stocks should have the same expected dividend.
• B) The two stocks could not be in equilibrium with the numbers given in the question.
• C) A's expected dividend is $0.50.
• D) B's expected dividend is $0.75.
• E) A's expected dividend is $0.75 and B's expected dividend is $1.20.

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Definitions:

Changing Market Tastes

Alterations in consumer preferences and desires that occur over time, often influencing product development and marketing strategies.

Abundance of Resources

A situation where there is more than enough resources, such as time, money, and materials, available to meet the needs or objectives of a project or organization.

New Regulations

Refers to recently implemented laws or rules established by governing bodies to impose standards and guide the behavior of individuals or organizations.

Inadequate Research and Development

A situation where insufficient investment or attention is given to research and development efforts, potentially hindering innovation and long-term competitiveness.