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

question 169

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?
$\begin{array} { l c c } & \mathrm { A } & \mathrm { B } \\\text { Required return } & 1 \overline{0 \%} & 1 \overline{2} \% \\\text { Market price } & \$ 25 & \$ 40 \\\text { Expected growth } & 7 \% & 9 \%\end{array}$

• 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:

Standard Cost

A predetermined cost of manufacturing a product or providing a service, used as a benchmark to measure actual performance against.

Budgeted Overhead

The projected or estimated indirect costs related to the operation of a business, which could include utilities, rent, and salaries.

Activity Total

The composite or sum total of costs associated with a specific activity or operation within a business.

Standard Costing

A cost accounting method that uses standard costs for direct materials, direct labor, and manufacturing overhead to measure performance.