Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate is 6.4%. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? A B Beta 1.20 1.40 Constant growth rate 7.00% 7.00% Group of answer choices Stock B's dividend yield equals its expected dividend growth rate. Stock A could have a higher expected return than Stock B. Stock B must have a higher dividend yield than Stock B. Stock A must have a higher required return than Stock B.. Stock A must have a higher stock price than Stock B
Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate is 6.4%. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? A B Beta 1.20 1.40 Constant growth rate 7.00% 7.00% Group of answer choices Stock B's dividend yield equals its expected dividend growth rate. Stock A could have a higher expected return than Stock B. Stock B must have a higher dividend yield than Stock B. Stock A must have a higher required return than Stock B.. Stock A must have a higher stock price than Stock B
Chapter6: Risk And Return
Section: Chapter Questions
Problem 14P
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Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate is 6.4%. Assuming the stock
A B
Beta 1.20 1.40
Constant growth rate 7.00% 7.00%
Group of answer choices
Stock B's dividend yield equals its expected dividend growth rate.
Stock A could have a higher expected return than Stock B.
Stock B must have a higher dividend yield than Stock B.
Stock A must have a higher required return than Stock B..
Stock A must have a higher stock price than Stock B
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