Stocks a and B Have the Following Data ?
A) the Two Stocks Should Have the Same Expected

question 36

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

• A) The two stocks should have the same expected dividend.
• B) The two stocks could not be in equilibrium with the numbers given in the question.
• C) A's expected dividend is $0.50.
• D) B's expected dividend is $0.75.
• E) A's expected dividend is $0.75 and B's expected dividend is $1.20.

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Definitions:

AASB 6

Exploration for and Evaluation of Mineral Resources, an Australian standard that governs the financial reporting of exploration and evaluation expenditures in the mining sector.

Exploration Phase

The period in the development of a mining, oil, or gas project focused on discovering and determining the size and quality of a mineral or hydrocarbon deposit.

Development Phase

A stage in the business cycle or project where new products, ideas, or projects are being developed, prior to commercial production or sale.

Exploration and Evaluation

Activities related to the search for mineral resources, including minerals, oil, natural gas, and similar non-regenerative resources after the entity has obtained rights to explore in a specific area.