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ericayi ericayi
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A year ago
Stocks X and Y sell at the same price. Stock X has a required return of 13% while Stock Y’s required return is 20%. Stock X’s dividend is expected to grow at a constant rate of 5% a year, while Stock Y’s dividend is expected to grow at a constant rate of 12%. If the market is in equilibrium so that expected returns equal required returns, which of the following statements is correct?


▸

Stock X has a higher dividend yield than Stock Y.



▸

Stock Y has a higher dividend yield than Stock X.



▸

Stock Y has a lower capital gains yield.



▸

One year from now, Stock X’s price is expected to be lower than Stock Y’s price.

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
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ikiddingikidding
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A year ago
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ericayi Author
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A year ago
this is exactly what I needed
jakechambo3
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Yesterday
Helped a lot
jaray75
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2 hours ago
Thank you, thank you, thank you!
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