Stocks a and B Have the Following Data A) These Two Stocks Must Have the Same Dividend Yield

question 81

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? $$\begin{array} { l c c } & \mathrm { A } & \mathrm { B } \\\text { Required return } & 10 \% & 12 \% \\\text { Market price } & \$ 25 & \$ 40 \\\text { Expected growth } & 7 \% & 9 \%\end{array}$$

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

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Definitions:

Activity-based Costing

A costing method that identifies the activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Overhead Costs

Expenses related to the operation of a business that cannot be directly attributed to a specific product or service, such as rent, utilities, and administration expenses.

Activity Rate

The predetermined overhead rate used in activity-based costing to allocate costs to products or services based on specific activities.

Activity-based Costing

A costing method that assigns costs to products or services based on the activities they require.