The Required Returns of Stocks X and Y Are RX

question 16

Multiple Choice

The 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.

Understand the concept and implications of opportunity cost of capital in investment decisions.

Gain knowledge on how callable bonds and non-callable bonds differ in pricing and what factors influence a firm’s decision to issue them.

Understand the roles and tasks paralegals are allowed and not allowed to perform.

Identify and apply the code of ethics relevant to paralegals from various professional organizations.

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Definitions:

Normalizing Reactions

A therapeutic technique aimed at helping individuals recognize that their feelings, thoughts, and behaviors in response to a particular situation are normal or typical.

Family Member

An individual related to another by blood, marriage, or adoption, often sharing a common household or familial bonds.

Law Enforcement

Government agencies and officers responsible for maintaining public order, preventing, detecting, and investigating crimes.

Crisis Counselor

A trained professional who provides immediate support and intervention for individuals facing emergency psychological situations, aiming to minimize the impact of the crisis.