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Question
Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?X Y
Price $25 $25
Expected dividend yield 5% 3%
Required return 12% 10%
a. Stock X pays a higher dividend per share than Stock Y.
b. One year from now, Stock X should have the higher price.
c. Stock Y has a lower expected growth rate than Stock X.
d. Stock Y has the higher expected capital gains yield.
e. Stock Y pays a higher dividend per share than Stock X.
Answer
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