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

question 9

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

• 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:

Employment Discrimination

Unfair treatment of employees or job applicants based on race, gender, age, religion, nationality, disability, or sexual orientation instead of job qualifications or performance.

Tournament Pay

A compensation structure where rewards are based on relative performance, often used in settings where output is hard to measure individually.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production, holding all other factors constant.

Productive Employees

Workers who achieve a high output in relation to their input, contributing effectively to the organization's goals.