Question: Stocks X & Y have the following data. Suppose the stock market is efficient & the stocks are in equilibrium, which of the following statements is CORRECT?
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X
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Y
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Price
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$30
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$30
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Expected growth (constant)
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6%
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4%
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Required return
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12%
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10%
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[A] One year from now, Stock X's price is expected to be higher than Stock Y's price.
[B] Stock X has the higher expected year-end dividend.
[C] Stock Y has a higher capital gains yield.
[D] Stock X has a higher dividend yield than Stock Y.
[E] Stock Y has a higher dividend yield than Stock X.