Stocks a and B Have the Following Data

question 34

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) Stock A's expected dividend at t = 1 is only half that of Stock B.
• B) Stock A has a higher dividend yield than Stock B.
• C) Currently the two stocks have the same price, but over time Stock B's price will pass that of A.
• D) Since Stock A's growth rate is twice that of Stock B, Stock A's future dividends will always be twice as high as Stock B's.
• E) The two stocks should not sell at the same price. If their prices are equal, then a disequilibrium must exist.

---

Definitions:

Sutures

Stitching or a series of stitches used to close a cut or wound in surgery or the natural or surgical joining of parts.

Accessory

An item or object that adds to or complements something else, often used in fashion or technology.

Ovary Tissue

Biological tissue found within the ovary that functions in the production of eggs (ova) and hormones like estrogen and progesterone.

Capsules

In biology, a membranous structure that encloses certain organs or parts; in medicine, a solid dosage form in which the drug is enclosed within either a hard or soft soluble container or shell.