Stocks a and B Have the Same Price and Are

question 31

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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Definitions:

Drug

A substance that has a physiological effect when ingested or otherwise introduced into the body, often used for medicinal purposes.

Gamma Aminobutyric Acid (GABA)

A neurotransmitter in the brain that plays a key role in regulating neural excitability and anxiety.

Neurotransmitter

Chemicals in the nervous system that transmit signals across a synapse from one neuron to another, influencing various functions such as mood and behavior.

Alcohol

A psychoactive substance and depressant that is found in beverages such as beer, wine, and spirits, affecting the central nervous system.