Stocks X and Y Have the Following Data ?
A) Stock X Has a Higher Dividend Yield Than

question 87

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? $$\begin{array} { l r r } & \mathrm { X } & \mathrm { Y } \\\text { Price } & \$ 30 & \$ 30 \\\text { Expected growth (constant) } & 6 \% & 4 \% \\\text { Required return } & 12 \% & 10 \%\end{array}$$
?

• A) Stock X has a higher dividend yield than Stock Y.
• B) Stock Y has a higher dividend yield than Stock X.
• C) One year from now,Stock X's price is expected to be higher than Stock Y's price.
• D) Stock X has the higher expected year-end dividend.
• E) Stock Y has a higher capital gains yield.

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Definitions:

Behavioural Decision Model

Decision-making with limited information and bounded rationality.

Rational

Based on or in accordance with reason or logic; a way of thinking or decision-making that is logical and based on facts and evidence.

Available Information

Refers to data or knowledge that can be accessed by individuals or systems at a given time.

Optimizing Decision

A decision that chooses the alternative giving the absolute best solution to a problem.