You Are Comparing Stock a to Stock B

question 15

Multiple Choice

You are comparing stock A to stock B. Given the following information, what is the difference in the expected returns of these two securities?

• A)-0.85 percent
• B)1.95 percent
• C)2.05 percent
• D)13.45 percent
• E)13.55 percent

---

Definitions:

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given period and must be paid out before dividends to common stockholders.

Cash Dividend

A payment made by a company out of its earnings to shareholders in the form of cash.

Market Price

The current rate for transactions involving a service or asset.

Stock Dividend

A stock dividend is a distribution of additional shares of a company's stock to its shareholders instead of cash dividends.