Changes in risk premiums and growth expectations


Here is information on Stock A and B:

                                                     Stock A    Stock B

Expected Dividends Next Year           $1.00       $2.33
Expected Constant ROE                      20%        20%
Expected Retention Rate                     70%        30%
Required Return on Stocks of = risk     20%        20%

Which stock is more sensitive to changes in risk premiums and growth expectations?

Also, would you consider either a true growth stock?

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Finance Basics: Changes in risk premiums and growth expectations
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