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:

Lacked Clarity

A condition where information or statements are not understandable or are ambiguous.

Reasoning Ability

The capacity to analyze information, solve problems, and make logical decisions based on available data.

Performance Appraisal

A systematic evaluation of an employee's performance in their job roles and contributions to the organization.

Quality

The standard of something as measured against other things of a similar kind; the degree of excellence of something.