If Two Firms Have the Same Current Dividend and the Same

question 102

Multiple Choice

If two firms have the same current dividend and the same expected growth rate,their stocks must sell at the same current price or else the market will not be in equilibrium.

• A) false, because the required return could be different
• B) true, because we are using a dividend valuation model
• C) true, if markets are semi-strong form efficient
• D) true, if investors are risk-averse

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Definitions:

Composite Volcano

A type of volcano formed by the eruption of viscous lava along with ash and rock, characterized by steep profiles and periodic, explosive eruptions.

Scoria Cone

A small, steep volcanic cone formed from fragments of lava ejected during explosive volcanic eruptions.

Composite Volcanoes

Volcanoes characterized by explosive eruptions and composed of alternating layers of lava flows and pyroclastic materials.

Pyroclastic Flows

Fast-moving currents of hot gas and volcanic materials that flow down the slopes of a volcano during an explosive eruption.