Stocks a and B Have the Following Data A) Stock a Must Have a Higher Dividend Yield Than

question 66

Multiple Choice

Stocks A and B have the following data.The market risk premium is 6.0% and the risk-free rate is 6.4%.Assuming the stock market is efficient and the stocks are in equilibrium,which of the following statements is CORRECT? $\begin{array}{lcr}&\underline { A } & \underline { B } \\\text { Beta } & 1.10 & 0.90 \\\text { Constant growth rate } & 7.00 \% & 7.00 \%\end{array}$

• A) Stock A must have a higher dividend yield than Stock B.
• B) Stock B's dividend yield equals its expected dividend growth rate.
• C) Stock B must have the higher required return.
• D) Stock B could have the higher expected return.
• E) Stock A must have a higher stock price than Stock B.

---

Definitions:

Negligence Action

A legal action taken for injury or damage resulting from a party's failure to exercise the care that a reasonably prudent person would have in similar circumstances.

B.C. Supreme Court

The superior trial court for the province of British Columbia, Canada, handling both civil and criminal cases.

Common Law

Common law is a legal system characterized by case law and precedent, where court judgments and legal principles from previous cases guide future rulings.

Courts of Equity

Judicial bodies that have the authority to apply principles of equity, as opposed to law, to cases brought before them.