Stocks a and B Have the Following Data

question 57

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 B
Required return 10% 12%
Market price $25 $40
Expected growth 7% 9%

• A) These two stocks should have the same price.
• B) These two stocks must have the same dividend yield.
• C) These two stocks should have the same expected return.
• D) These two stocks must have the same expected capital gains yield.
• E) These two stocks must have the same expected year-end dividend.

---

Definitions:

Events

Occurrences or happenings that are distinctive and can be identified in time and space.

Vestibular Sense

The sensory system that provides the leading contribution to balance and spatial orientation for the purpose of coordinating movement with balance.

Inner Ear

The innermost part of the ear, containing the cochlea, vestibular system, and associated structures, essential for hearing and balance.

Olfactory Bulb

A brain structure involved in the sense of smell, receiving sensory input from the nose and processing it before sending information to other areas of the brain.