Stock A has a required return of 10.00%, while Stock B has a required return of 8.00%. Which of the following statements is CORRECT?
a. If Stock A and Stock B have the same current dividend and the same expected dividend growth rate, then Stock A must sell for a higher price.
b. Stock A must have a higher dividend yield than Stock B.
c. The stocks must sell for the same price.
d. If the market is in equilibrium, and if Stock A has the lower expected dividend yield, then it must have the higher expected growth rate.
e. If Stock A and Stock B have the same dividend yield, then Stock A must have a lower expected capital gains yield than Stock B.
b. Stock A must have a higher dividend yield than Stock B.
c. The stocks must sell for the same price.
d. If the market is in equilibrium, and if Stock A has the lower expected dividend yield, then it must have the higher expected growth rate.
e. If Stock A and Stock B have the same dividend yield, then Stock A must have a lower expected capital gains yield than Stock B.
