Stocks A and B have a dividend of $3. Stock A’s dividends are expected to grow at 3% forever. Dividends for Stock Dividends for Stock B are expected to remain at $3 forever. All else equal, which stock should have a higher price? A B A=B Not sure Company Dividend Yield Required Return Price Market Capitalization A 7% 10% $100 $1,000,000 B 7% 11% $10 $10,000,000 Which stock has the higher capital gain's yield? A B A=B Not sure
Stocks A and B have a dividend of $3. Stock A’s dividends are expected to grow at 3% forever. Dividends for Stock Dividends for Stock B are expected to remain at $3 forever. All else equal, which stock should have a higher price? A B A=B Not sure Company Dividend Yield Required Return Price Market Capitalization A 7% 10% $100 $1,000,000 B 7% 11% $10 $10,000,000 Which stock has the higher capital gain's yield? A B A=B Not sure
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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please respond to both questions.
Stocks A and B have a dividend of $3. Stock A’s dividends are expected to grow at 3% forever. Dividends for Stock Dividends for Stock B are expected to remain at $3 forever. All else equal, which stock should have a higher price?
|
A |
||
|
B |
||
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A=B |
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Not sure |
|
Company |
Dividend Yield |
Required Return |
Price |
Market Capitalization |
|
A |
7% |
10% |
$100 |
$1,000,000 |
|
B |
7% |
11% |
$10 |
$10,000,000 |
Which stock has the higher
|
A |
||
|
B |
||
|
A=B |
||
|
Not sure |
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