Two Constant Growth Stocks Are in Equilibrium, Have the Same

question 7

Multiple Choice

Two constant growth stocks are in equilibrium, have the same price, and have the same required rate of return.Which of the following statements is CORRECT?

• A) If one stock has a higher dividend yield, it must also have a lower dividend growth rate.
• B) If one stock has a higher dividend yield, it must also have a higher dividend growth rate.
• C) The two stocks must have the same dividend growth rate.
• D) The two stocks must have the same dividend yield.
• E) The two stocks must have the same dividend per share.

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Definitions:

Supply Of Labor

The total hours that workers wish to work at a given wage rate, representing the workforce available for employment.

Unionized

A condition where employees are organized into unions to collectively bargain with employers over wages, benefits, and working conditions.

Union Wages

Wages that are negotiated by labor unions on behalf of their members, typically resulting in higher pay and better benefits compared to non-union wages.