17) Two constant growth stocks are in equilibrium, have the same price, and have

Question

17) Two constant growth stocks are in equilibrium, have the same price, and have the same required rate of return. Which of the following statements is CORRECT? A. The two stocks must have the same dividend yield B. The two stocks must have the same dividend growth rate. The two stocks must have the same dividend per share. Ifone stock has a higher dividend yield, it must also have a higher dividend growth rate. If one stock has a higher dividend yield, it must also have a lower dividend growth rate. C. D. E.

Explanation / Answer

required return = dividend yield + growth rate

so if dividend is lower for one it ust have a higher growth rate to compensate

so E is the answer

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