Stocks X and Y Have the Following Data A) Stock X Pays a Higher Dividend Per Share Than

question 6

Multiple Choice

Stocks X and Y have the following data.Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? $$\begin{array} { l c c } & \mathrm { X } & \mathrm { Y } \\\text { Price } & \$ 25 & \$ 25 \\\text { Expected dividend yield } & 5 \% & 3 \% \\\text { Required return } & 12 \% & 10 \%\end{array}$$

• A) Stock X pays a higher dividend per share than Stock Y.
• B) One year from now, Stock X should have the higher price.
• C) Stock Y has a lower expected growth rate than Stock X.
• D) Stock Y has the higher expected capital gains yield.
• E) Stock Y pays a higher dividend per share than Stock X.

---

Definitions:

Factory Overhead

All indirect costs associated with manufacturing that are not directly tied to a specific product, such as maintenance, utilities, and quality control.

Multiple Products

The practice of producing or selling more than one type of product by a single firm, often to diversify market reach and revenue sources.

Activity-based Costing

An approach to cost allocation where overhead and indirect costs are apportioned to corresponding products and services according to the activities they necessitate.

Indirect Labor

Labor costs not directly tied to the production of specific goods or services, such as maintenance and cleaning staff.