Stocks a and B Have the Same Price and Are

question 73

Multiple Choice

Stocks A and B have the same price and are in equilibrium,but Stock A has the higher required rate of return.Which of the following statements is CORRECT?

• A)If Stock A has a lower dividend yield than Stock B, its expected capital gains yield must be higher than Stock B's.
• B)Stock B must have a higher dividend yield than Stock A.
• C)Stock A must have a higher dividend yield than Stock B.
• D)If Stock A has a higher dividend yield than Stock B, its expected capital gains yield must be lower than Stock B's.
• E)Stock A must have both a higher dividend yield and a higher capital gains yield than Stock B.

---

Definitions:

Worksheet

A paper or digital document used to organize data and perform calculations, often preliminary to the preparation of financial statements.

Ledger

A group of accounts that records data from business transactions.

Withdrawals Account

An account used to track the money that an owner takes out of the business for personal use, also known as draws.

Capital Account

A financial statement that shows the changes in a company's equity, including contributions by and distributions to owners over a period.