Two Constant Growth Stocks Are in Equilibrium, Have the Same

question 45

Multiple Choice

Two constant growth stocks are in equilibrium, have the same price, and have the same required rate of return.Which of the following statements is CORRECT?

• A) If one stock has a higher dividend yield, it must also have a lower dividend growth rate.
• B) If one stock has a higher dividend yield, it must also have a higher dividend growth rate.
• C) The two stocks must have the same dividend growth rate.
• D) The two stocks must have the same dividend yield.
• E) The two stocks must have the same dividend per share.

---

Definitions:

Mala Prohibita

Acts that are crimes because legislation defines them as such, despite not being inherently evil or immoral.

Statutory Law

Law established by the enactment of legislation by a governing body, as opposed to case law or regulations promulgated by governmental agencies.

Common Law

A legal system based on judicial decisions and precedents, rather than codified laws.

Subjective Fault

A legal concept where an individual's personal judgment or intention affects the determination of liability or guilt.