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annyan annyan
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9 months ago
Stocks A and B have the same required return of 20% and the same price, $30. Stock A’s dividend is expected to grow at a constant rate of 4% per year, while Stock B’s dividend is expected to grow at a constant rate of 16% per year. Which of the following statements is correct?


▸

Since Stock B’s growth rate is four times that of Stock A, Stock A’s future dividends will always be four times as high as Stock B’s. 



▸

Stock A has a lower dividend yield than Stock B.



▸

Currently the two stocks have the same price, but over time Stock A’s price will pass that of Stock B.



▸

Stock A’s expected dividend at t = 1 is four times that of Stock B.

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
Authors:
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catdastercatdaster
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9 months ago
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annyan Author
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9 months ago
Thanks for your help!!
big_larry_samp
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Yesterday
Helped a lot
homework1
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2 hours ago
Thank you, thank you, thank you!
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