1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Bas_tet [7]
3 years ago
8

Two constant growth stocks are in equilibrium, have the same price, and have the same required rate of return. Which of the foll

owing statements is CORRECT?a. The two stocks must have the same dividend per share.b. If one stock has a higher dividend yield, it must also have a lower dividend growth rate.c. The two stocks must have the same dividend yield.d. The two stocks must have the same dividend growth rate.e. If one stock has a higher dividend yield, it must also have a higher dividend growth rate.
Business
1 answer:
Assoli18 [71]3 years ago
7 0

Answer:

B: If one stock has a higher dividend yield, it must also have a lower dividend growth rate

Explanation:

A constant growth stock is valued using the formula:

P0 = \frac{D1}{ke-g}

from this formula,  holding other things constant, a higher D1 value would decrease P0, whilst a lower g value would have an effect of lowering P0.

For the two stocks to be in equilibrium, since we are not specifically  told that the two stocks have the same growth rate [ the question simply says the growth rate is constant...meaning it is not expected to change], it thus follows that if one one stock has a higher dividend value ( which would  increase the price if all other variables are not changed), it must also have a lower dividend growth rate, which would have the opposing effect, thus keeping the two stocks in equilibrium.

You might be interested in
(Vetro Inc) Vetro Inc. is a glass manufacturer that produces glasses of every shape and type. Recently it signed a contract to s
Nataliya [291]

Answer:

Answer is explained in the explanation section below.

Explanation:

Data Given:

LSL = 4.96 cm

USL = 5.04 cm

Mean = 5 cm

SD = 0.01 cm

1. Capability Index:

Cpk = min ( \frac{USL - Mean }{3SD} , \frac{Mean - LSL}{3SD} )

So, now, we need to find the following:

\frac{USL - Mean }{3SD} = \frac{5.04 - 5 }{3 * 0.01}

\frac{USL - Mean }{3SD} = \frac{0.04}{0.03}

\frac{USL - Mean }{3SD} = 1.33

Similarly,

\frac{Mean - LSL }{3SD} = \frac{5 - 4.96 }{3 * 0.01}

\frac{Mean - LSL }{3SD} = \frac{0.04}{0.03}

\frac{Mean - LSL }{3SD} = 1.33

So,

Cpk = min ( \frac{USL - Mean }{3SD} , \frac{Mean - LSL}{3SD} ) = 1.33

2. Maximum Standard deviation allowed.

Let SD be maximum standard deviation allowed.

So,

Mean - 3SD = 4.96     Equation 1

Mean + 3SD = 5.04    Equation 2

Subtracting Equation 2 from 1, we have

6SD = 5.04 - 4.96

6SD = 0.08

SD = 0.0133

3 0
3 years ago
What is the purpose of a marketing plan?
Elza [17]

Answer:

The is purpose of marketing plan is to:define strategies to engage audiences in order to achieve business objectives

Explanation:

hope it helps

4 0
2 years ago
How hospital capacity considerations differ from a factory.
sleet_krkn [62]

Answer:

One of the differences between hospital and factory capacity is that a hospital can add capacity easily by adding more staff and beds. A factory is usually technologically limited and therefore must plan well in advance to add capacity.

Explanation:

3 0
2 years ago
A map from trade development commissions or chamber of commerce can be more useful that google maps for identifying
Marrrta [24]

A map from trade development commissions or chamber of commerce can help identify <em>major areas of commerce and location.</em>

Explanation:

Google map helps with location of building but will not give information about the commerce aspect of the building.

But since the Trade Development Commission has exclusive responsibility to provide that, then it will be more useful to identify major areas of commerce and their locations.

#learnwithbrainly

8 0
3 years ago
What is the Securities and Exchange Commission (SEC)?
ValentinkaMS [17]
A federal agency that regulates the stock market
7 0
2 years ago
Read 2 more answers
Other questions:
  • All the following items are similar to each other except one. Which item is least like the others?
    8·1 answer
  • Adapting to new conditions like new innovations by competitors, fast-changing technological developments, and constantly evaluat
    13·1 answer
  • Budget information for college athletic programs show that the programs could not exist with receive a significant amount of mon
    9·1 answer
  • The common stock of Alpha Manufacturers has a beta of 1.18 and an actual expected return of 13.33 percent. The risk-free rate of
    11·1 answer
  • Year Cash Flow 0 –$ 8,300 1 2,100 2 3,000 3 2,300 4 1,700 What is the payback period for the set of cash flows given above? (Do
    10·1 answer
  • The market price of a security is $50. Its expected rate of return is 14%. The risk-free rate is 6% and the market risk premium
    8·1 answer
  • The material cost per equivalent unit using the weighted average costing method is calculated as a.total material costs to accou
    9·1 answer
  • Brian lives in Chicago and runs a business that sells pianos. In an average year, he receives $793,000 from selling pianos. Of t
    14·1 answer
  • When can a bank repossess someone's car?
    15·2 answers
  • A ________ is an intermediate step in the transition from a free trade area to a common market.
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!