Stocks a and B Have the Same Price and Are

question 12

Multiple Choice

Stocks A and B have the same price and are in equilibrium, but Stock A has the higher required rate of return.Which of the following statements is CORRECT?

• A) Stock B must have a higher dividend yield than Stock A.
• B) Stock A must have a higher dividend yield than Stock B.
• C) If Stock A has a higher dividend yield than Stock B, its expected capital gains yield must be lower than Stock B's.
• D) Stock A must have both a higher dividend yield and a higher capital gains yield than Stock B.
• E) If Stock A has a lower dividend yield than Stock B, its expected capital gains yield must be higher than Stock B's.

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