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

question 75

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? $$\begin{array} { l c c } & \mathrm { X } & \mathrm { Y } \\\text { Price } & \$ 25 & \$ 25 \\\text { Expected dividend yield } & 5 \% & 3 \% \\\text { Required return } & 12 \% & 10 \%\end{array}$$

• 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:

Y-intercept

The point where a graph intersects the y-axis, representing the value of the dependent variable when all independent variables are zero.

X-intercept

The point where a curve intersects the x-axis on a graph, indicating where the function has a value of zero.

Y-intercept

The point where a line or curve intersects the y-axis of a graph.

Absolute Value

The distance of a number from zero on the number line, without considering which direction from zero the number lies.