Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?

Question

Quizplus · Accepted Answer

The efficient market hypothesis states that all relevant information is already reflected in a stock's price, meaning that the stock is in equilibrium. Therefore, the only difference between stocks X and Y should be due to their respective dividends per share. Stock X has a higher price but a lower dividend per share, while Stock Y has a lower price but a higher dividend per share. Since the only difference is the dividend, we can conclude that Stock Y pays a higher dividend per share than Stock X.

Stocks X and Y Have the Following Data