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?

$\begin{array}{lcc}
&\underline { X } & \underline { Y } \
\text { Price } & \$ 25 & \$ 25 \
\text { Expected dividend yield } & 5 \% & 3 \% \
\text { Required return } & 12 \% & 10 \%
\end{array}$

Question

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?

$\begin{array}{lcc}
&\underline { X } & \underline { Y } \
\text { Price } & \$ 25 & \$ 25 \
\text { Expected dividend yield } & 5 \% & 3 \% \
\text { Required return } & 12 \% & 10 \%
\end{array}$

Quizplus · Accepted Answer

$\text { Dividend }=\text { Yield } \times \text { Price: } \quad \mathrm{X} \text { dividend }=\$ 1.25 \quad \mathrm{Y} \text { dividend }=\$ 0.75$ Stock X has a dividend yield of 5% versus a yield of 3% for Y.Since they both have the same stock price,X must pay a higher dividend.

Stocks X and Y Have the Following Data A) Stock X Pays a Higher Dividend Per Share Than