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:

Student T-distributed

Pertaining to a probability distribution used in statistics for estimating population parameters when the sample size is small and population variance is unknown.

Population Variances

Measures of the spread or distribution of a set of data points in a population, quantifying the degree to which these points differ from the population mean.

Sample Variance

A measure of the dispersion or spread of a set of data points around their mean, calculated as the sum of the squared deviations from the mean, divided by the number of observations minus one.

Equal-variances Test

A statistical test used to determine if two or more samples have equal variances.