Stocks a and B Have the Following Data A) Stock A's Expected Dividend at T = 1 Is

question 83

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? $\begin{array}{lrr}& \underline{\text { A }} &\underline{\text {B}}\\ \text { Price } & \$ 25 & \$ 25\\\text { Expected growth } & 10 \% & 5 \% \\\text { Expected return } & 15\% & 15 \%\end{array}$

• A) Stock A's expected dividend at t = 1 is only half that of Stock B.
• B) Stock A has a higher dividend yield than Stock B.
• C) Currently the two stocks have the same price, but over time Stock B's price will pass that of A.
• D) Since Stock A's growth rate is twice that of Stock B, Stock A's future dividends will always be twice as high as Stock B's.
• E) The two stocks should not sell at the same price. If their prices are equal, then a disequilibrium must exist.

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Definitions:

Selective Perception

The process where individuals selectively interpret what they see based on their interests, background, experience, and attitudes.

Perceptual Bias

is the tendency for perception to be affected by recurring thoughts, beliefs, or attitudes, leading to distorted interpretations of information.

Attribution Bias

A cognitive bias that affects the way people deduce the causes of their own and others' behaviors, often attributing them incorrectly.

Employee Withdrawal Behaviors

Actions by employees to disengage from work, which can include absenteeism, tardiness, or quitting, often due to dissatisfaction or disinterest.