Stocks a and B Have the Following Data

question 39

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?

• A) Stock A has a higher dividend yield than Stock B.
• B) Currently the two stocks have the same price, but over time Stock B's price will pass that of A.
• C) Since Stock A's growth rate is twice that of Stock B, Stock A's future dividends will always be twice as high as Stock B's.
• D) The two stocks should not sell at the same price. If their prices are equal, then a disequilibrium must exist.
• E) Stock A's expected dividend at t = 1 is only half that of Stock B.

---

Definitions:

Unsalted Cashews

Cashew nuts that have not been treated with salt, often preferred for their natural flavor or health considerations.

Pure Irish Butter

A type of butter made from the milk of grass-fed cows in Ireland, known for its rich flavor and higher fat content than regular butter.

Full Liquid Diet

A diet that consists only of liquids or foods that turn to liquid at room temperature, designed for medical purposes.

Tomato Cream Soup

A type of soup made from tomatoes and cream, along with various seasonings, offering a rich and creamy texture.