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? XYPrice$25 $25 Expected dividend yield5% 3% Required return12% 10% ?
A. Stock Y pays a higher dividend per share than Stock X.
B. Stock X pays a higher dividend per share than Stock Y.
C. One year from now, Stock X should have the higher price.
D. Stock Y has a lower expected growth rate than Stock X.
E. Stock Y has the higher expected capital gains yield.
Answer: B
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