Stock valuation beneath equilibrium situation

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Reference no: EM1311010

Stock valuation beneath equilibrium situation.

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?

	X	Y
Price	$30	$30
Expected growth (constant)	6%	4%
Required return	12%	10%

a. Stock X has a higher dividend yield than Stock Y.

b. Stock Y has a higher dividend yield than Stock X.

c. One year from now, Stock X's price is expected to be higher than Stock Y's price.

d. Stock X has the higher expected year-end dividend.

e. Stock Y has a higher capital gains yield.

Reference no: EM1311010

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