Stocks a and B Have the Following Data A) These Two Stocks Must Have the Same Dividend Yield

question 77

Multiple Choice

Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?
$\begin{array}{lcc}& \mathrm{A}& \underline{\mathrm{B}} \\\text { Required return } & 10 \% & 12 \%\\\text { Market price } & \$ 25 & \$ 40 \\\text { Expected growth } & 7\%& 9\% \\\end{array}$

• A) these two stocks must have the same dividend yield.
• B) these two stocks should have the same expected return.
• C) these two stocks must have the same expected capital gains yield.
• D) these two stocks must have the same expected year-end dividend.
• E) these two stocks should have the same price.

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Definitions:

Convolutions

Refers to the folds and wrinkles found in the cerebral cortex of the brain that increases its surface area.

Cerebral Cortex

The outer layer of neural tissue covering each hemisphere of the brain, crucial for higher brain functions such as thought, language, and consciousness.

Outer Surface

The external layer or boundary of an object, material, or living organism.

Folds

Occur in various contexts, such as geology where they are bends in layered rocks, or in biology, as in the folding of proteins into complex structures.