Stocks X and Y Have the Following Data A) Stock X Pays a Higher Dividend Per Share Than

question 27

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?


$\begin{array}{lcc}&\underline { X } & \underline { Y } \\\text { Price } & \$ 25 & \$ 25 \\\text { Expected dividend yield } & 5 \% & 3 \% \\\text { Required return } & 12 \% & 10 \%\end{array}$

• A) Stock X pays a higher dividend per share than Stock Y.
• B) One year from now, Stock X should have the higher price.
• C) Stock Y has a lower expected growth rate than Stock X.
• D) Stock Y has the higher expected capital gains yield.
• E) Stock Y pays a higher dividend per share than Stock X.

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Definitions:

Expectancies

Beliefs or predictions about the outcomes of certain behaviors or events.

Opportunities

Circumstances that present chances for advancement, progress, or benefit in various contexts such as career, personal growth, or investment.

Convergent Validation

The process of assembling diverse pieces of information that converge on a common conclusion.

Interjudge Agreement

The degree of consistency or accord in the assessments or ratings of different judges or observers.