If Two Constant Growth Stocks Have the Same Price and the Same

question 76

Multiple Choice

If two constant growth stocks have the same price and the same required rate of return,which of the following statements is correct?

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

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Definitions:

Standardized

Establishing uniform standards or norms for a process, product, or system to ensure consistency and comparability across different instances.

Advertising

The profession or act of creating promotional content for commercial goods or services.

Standardized Product

Goods that are uniform in quality and specifications, enabling them to be interchangeable with similar products from other producers.

Perfect Competition

A market structure characterized by a large number of small firms, identical products, free entry and exit, and perfect information, leading to price takers.