Stock A has a beta of 1.1 and constant growth rate of 7%. Stock B has a beta of 0.9 and constant growth rate of 7%. The market risk premium is 6.0% and the risk-free rate is 6.4%. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?
Group of answer choices
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.