Stock A has a beta of 1.1 and Stock B has a beta of 0.9. The market risk premium is 6%, and the risk-free rate is 6.3%. Both stocks have a constant dividend growth rate of 7% a year. If the market is in equilibrium, which of the following statements is correct?

		Stock A must have a higher dividend yield than Stock B.
		Stock A must have a higher stock price 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.

Answer rating: 100% (QA)

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