Stocks that have the same expected risk should:
A)Offer the same dividend payment
B)Have the same sustainable growth rate
C)Have the same price
D)Have the same expected rate of return

Question

Quizplus · Accepted Answer

Stocks with the same expected risk should have the same expected rate of return. This is because investors require compensation in the form of higher returns for taking on higher risks. Therefore, if two stocks have the same level of risk, investors would require the same level of returns from both. Options A, B, and C are not necessarily true as dividend payments, growth rates, and stock prices are influenced by factors other than expected risk levels.

Stocks That Have the Same Expected Risk Should