Which assertion about stock gamma is true

Reference no: EM131935609

Question: Which assertion about stocks gamma, Hotel, India, and Juliet is true if PH > PG > 0 and PI > PJ > 0? All 4 stocks pay annual dividends with the next dividend expected to be paid in 1 year. The dividends for each stock are expected to grow at a constant rate of G forever. The expected returns for stocks Gamma and Hotel are expected to be different, and the expected returns for stocks India and Juliet are expected to be the same. The next expected dividends for stocks India and Juliet are expected to be different and the next expected dividends for stocks Gamma and Hotel are expected to be the same. Assume all expected dividends, growth rates, and returns are positive and all expected growth rates are less than all expected returns. Stock Price Next expected dividend Expected dividend growth rate Expected return Gamma PG D G RG Hotel PH D G RH India PI DI G R Juliet PJ DJ G R

A. The expected return of stock Hotel is greater than the expected return of stock Gamma and the next expected dividend of stock Juliet is greater than the next expected dividend of stock India

B. The expected return of stock Gamma is greater than the expected return of stock Hotel and the next expected dividend of stock India is greater than the next expected dividend of stock Juliet

C. The expected return of stock Gamma is greater than the expected return of stock Hotel and the next expected dividend of stock Juliet is greater than the next expected dividend of stock India

D. Answer not listed or not possible.

E. The expected return of stock Hotel is greater than the expected return of stock Gamma and the next expected dividend of stock India is greater than the next expected dividend of stock Juliet.

Reference no: EM131935609

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