Stock A has a required return of 4%. Stock B has a required return of 5%. Both stocks have the same dividend and growth rate. Which one will have the higher value? Select one: a. not enough information b. B c. A
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Stock A has a required return of 4%. Stock B has a required return of 5%. Both stocks have the same dividend and growth rate. Which one will have the higher value?
not enough information
B
A
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- An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?Stock A has a required return of 11%. Stock B has a required return of 9%. Both stocks have the same dividend and growth rate. Which one will have the higher value? Select one: a. B b. not enough information c. AStocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate is 6.4%. Which of the following statements is CORRECT? (Hint: Dividend yield (D1/P0) is the difference between Re and g. Calculate Re first by using CAPM.) A B Beta 1.10 0.90 Constant growth rate 7.00% 7.00% Stock A must have a higher stock price than Stock B. Stock A must have a higher dividend yield than Stock B. Stock B’s dividend yield equals its expected dividend growth rate. Stock B must have the higher required return. Stock B could have the higher expected return.
- please respond to both. A company that has a stock price of $200 must have a higher market capitalization than a company with a stock price of $2. True False Stock A has a constant dividend growth rate of 5% and Stock B has constant dividend growth rate of 6%. Both stocks have a dividend yield of 5%. Which stock has the higher required return? A B A=B Not sureStocks A and B have a required return of 14%. Stock A has a dividend yield of 8%. Stock B has a dividend yield of 9%. Which stock has a higher capital gains yield? Select one: a. not enough information b. A c. BWhich of the following statements is CORRECT? a. If a stock has a required rate of return rs = 12% and its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%. b. The stock valuation model, P0 = D1/(rs − g), can be used to value firms whose dividends are expected to decline at a constant rate, i.e., to grow at a negative rate. c. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. d. The constant growth model cannot be used for a zero growth stock, where the dividend is expected to remain constant over time. e. The constant growth model is often appropriate for evaluating start-up companies that do not have a stable history of growth but are expected to reach stable growth within the next few years.
- Stocks A and B have a required return of 13%. Stock A has a capital gains yield of 8%. Stock B has a capital gains yield of 9%. Which stock has a higher dividend yield? Select one: a. not enough information b. A c. Bthe dividend growth model may be use to value a stock v=Do(1+g) k-g a. what is the value of a stock if: Do=$2 k==10% g=6% b. what is the value of this stock if the dividend is increased to $3 and the other variables remain constant? c. what is the value os this stock if the required return decline to 7.5 percent and the other variables remain constant? d. what is the value of this stock if the growth rate declines to 4 percent and the other variables remin constant? e. what is the value of this stock if the dividend is increased to $2.30, the growth rate declines to 4 percent, and the required return remains 10 percent?The required returns of Stocks X and Y are rX = 10% and rY = 12%. Which of the following statements is CORRECT? 1. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. 2. The stocks must sell for the same price. 3. Stock Y must have a higher dividend yield than Stock X. 4. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. 5. If the market is in equilibrium, and if Stock Y has the lower expected dividend yield, then it must have the higher expected growth rate.
- Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate is 6.4%. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? A B Beta 1.10 0.90 Constant growth rate 7.00% 7.00% a. Stock A must have a higher dividend yield than Stock B. b. Stock B's dividend yield equals its expected dividend growth rate. c. Stock B must have the higher required return. d. Stock B could have the higher expected return. c. Stock A must have a higher stock price than Stock B.Which of the following statements is CORRECT? a. Two firms with the same expected dividend and growth rates must also have the same stock price. b. It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant. c. If a stock has a required rate of return rs = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%. d. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. e. The constant growth model takes into consideration the capital gains investors expect to earn on a stock.Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? A B Required return 10% 12% Market price $25 $40 Expected growth 7% 9% a. These two stocks must have the same dividend yield. b. These two stocks should have the same expected return. c. These two stocks must have the same expected capital gains yield. d. These two stocks must have the same expected year-end dividend. e. These two stocks should have the same price.
