Stock a Has a Required Return of 10% and a Price

question 9

Multiple Choice

Stock A has a required return of 10% and a price of $25,and its dividend is expected to grow at a constant rate of 7% per year.Stock B has a required return of 12% and a price of $40,and its dividend is expected to grow at a constant rate of 9% per year.Which of the following statements is correct?

• A)If the stock market were efficient, these two stocks would have the same price.
• B)The two stocks have the same dividend yield.
• C)If the stock market were efficient, these two stocks would have the same expected return.
• D)The two stocks have the same expected capital gains yield.

Learn the significance of efficiency and competitive advantage as organizational objectives.

Differentiate between goals and objectives, and their measurability and time orientation.

Grasp the concept of crisis management and its essential elements.

Recognize the process and importance of staffing in an organization.

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Definitions:

Legal Price

The price of a good or service as determined or influenced by law or regulation, often in the context of price controls or minimum wage laws.

Dynamic Pricing

Dynamic pricing is a strategy where businesses set flexible prices for products or services based on current market demand.

Equilibrium

A condition where the supply and demand in the market are equal, leading to steady prices.

Advanced Analysis

Advanced analysis refers to complex techniques and methods used to examine data, processes, or systems in depth, often to make predictions or informed decisions.