Question: Two stocks have the same market risk and the same amount of most recent dividend. The first stocks dividend is expected to grow at 7%

Two stocks have the same market risk and the same amount of most recent dividend. The first stocks dividend is expected to grow at 7% per year. The second stocks dividend is expected to grow at -7% per year. Both stocks are fairly valued by the market. Which of the following statements is correct?

The first stock is a better investment than the second stock
The first stock has a higher dividend yield than the second stock
The first stock has a higher expected return than the second stock
None of the above is correct

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