Answer A or B A Stock A has a payout of 04 Stock B has a pay

Answer A or B. A. Stock A has a payout of 0.4 Stock B has a payout of 0.6. All else equal, which stock must have a higher dividend? B. Stock A has a growth rate of 6%. Stock B has a growth rate of 10%. Both have the same required return. Which has the higher dividend yield? C. Bond A is callable. Bond B is not callable. All else equal, which one is more risky? D. Bond A is priced at $990. Bond B is priced at $1010. Both have a yield of 6%. All else equal, which bond has the higher coupon rate?

Solution

A)

Stock B have Higher Dividend due to higher payout ratio .

B)

Stock A has a higher Dividend yield due to lower growth rate .

C)Bond B is more risky as it is non callable (even if interest rate is favorable you cannot call the bonds and you have to bear interest risk]

D)Bond B has higher coupon rate as it is a premium selling bond.