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

question 5

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

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

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Definitions:

Downward Social Comparisons

This occurs when individuals compare themselves to others who are worse off in order to feel better about their own situation or abilities.

Self-Image

The personal viewpoint of an individual about themselves, including beliefs about appearance, personality, and capabilities.

Reference Group

A group that individuals use as a standard for evaluating themselves and their own behaviors, influencing their attitudes and behaviors.

Mainstream American Culture

The set of norms, behaviors, beliefs, and values that are widely accepted and practiced by the majority of the American population.