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:

Disposable Income

The financial resources families have for expenditures and savings after income taxes are removed.

Disposable Income

The total funds available to families for spending and saving after subtracting income tax.

Transfer Payments

Payments made by governments to individuals without any expectation of a good or service in return, such as welfare or unemployment benefits.

Marginal Propensity

This measures the likelihood of an individual or entity to spend an additional unit of currency. Specifically, it assesses how changes in income affect spending or saving habits.