Stocks a and B Have the Following Data

question 67

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) 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:

Indifference Curve

Represents a graph that shows a combination of two goods that give the consumer equal satisfaction and utility, thereby making the consumer indifferent.

Absolute Value

A mathematical function that describes the distance of a number on the real number line from zero, without considering direction.

Slope

The rate at which one variable changes in relation to another variable, often used in the context of a graph.

Indeterminate

A condition or situation that lacks a clear or definite resolution or outcome.