Stocks a and B Have the Same Price and Are

question 12

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

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Definitions:

Financial Reasons

Refers to the monetary factors or considerations that influence decisions, actions, or outcomes.

Reciprocity

The mutual exchange of privileges, goods, or services as well as attitudes, behaviors, and social support among individuals or groups.

Leadership Skills

The abilities and competencies that enable an individual to influence, motivate, and enable others to contribute toward organizational success.

Erik Erikson

A developmental psychologist known for his theory on the psychosocial development of human beings across eight stages of life.