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Question(s) / Instruction(s):

Stocks A and B have the same price and are in equilibrium, but Stock A has the higher required rate of return. Which of the following statements is CORRECT?

A.            If Stock A has a lower dividend yield than Stock B, its expected capital gains yield must be higher than Stock B\'s.

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

C.            Stock A must have a higher dividend yield than Stock B.

D.            If Stock A has a higher dividend yield than Stock B, its expected capital gains yield must be lower than Stock B\'s.

E.            Stock A must have both a higher dividend yield and a higher capital gains yield than Stock B.

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