Stocks a and B Have the Following Data

question 57

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.

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Definitions:

Previous Balance

The amount of money that was owed at the end of the last billing cycle in financial accounts and credit statements.

Cycle Closing

Cycle Closing refers to the process of finalizing all transactions and balances for a specific accounting period, ensuring that all financial activities within that period are accounted for and concluded.

Simple Interest

Simple interest is a method of calculating the interest charge on a loan based on the original principal amount and the interest rate, without compounding over time.

Monthly Basis

A term referring to events or calculations repeated or measured every month.