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Suppose a Stock Has the Same Expected Rate of Return

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Suppose a stock has the same expected rate of return as a bank account. Explain why this is not an equilibrium situation.


Definitions:

Ingroup Bias

The tendency to favor members of one's own group over those from external groups.

Social Identities

The part of an individual's self-concept derived from their perceived membership in social groups.

Outgroup Homogeneity

The perception that members of an out-group are more similar to each other than they actually are, especially when compared to the perceived diversity within an in-group.

Gender

Variations in traits that distinguish between male and female qualities.

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