Stocks A and B have the following data. Assuming the stock market is efficient and the stocks prices are in equilibrium – i.e. – prices are equal to their intrinsic value, which of the following statements is CORRECT? A B Price $25 $40 Expected growth 7% 9% Expected return 10% 12% The two stocks should have the same expected dividend. The two stocks could not be in equilibrium with the numbers given in the question. A's expected dividend is $0.50. B's expected dividend is $0.75. A's expected dividend is $0.75 and B's expected dividend is $1.20.
Stocks A and B have the following data. Assuming the stock market is efficient and the stocks prices are in equilibrium – i.e. – prices are equal to their intrinsic value, which of the following statements is CORRECT? A B Price $25 $40 Expected growth 7% 9% Expected return 10% 12% The two stocks should have the same expected dividend. The two stocks could not be in equilibrium with the numbers given in the question. A's expected dividend is $0.50. B's expected dividend is $0.75. A's expected dividend is $0.75 and B's expected dividend is $1.20.
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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3 - Stocks A and B have the following data. Assuming the stock market is efficient and the stocks prices are in
|
|
A |
B |
|
Price |
$25 |
$40 |
|
Expected growth |
7% |
9% |
|
Expected return |
10% |
12% |
- The two stocks should have the same expected dividend.
- The two stocks could not be in equilibrium with the numbers given in the question.
- A's expected dividend is $0.50.
- B's expected dividend is $0.75.
- A's expected dividend is $0.75 and B's expected dividend is $1.20.
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