A Stock to Be in Equilibrium, That Is, for There

question 37

Multiple Choice

a stock to be in equilibrium, that is, for there to be no long-term pressure for its price to depart from its current level, then

• A)the expected future return must be less than the most recent past realized return.
• B)The past realized return must be equal to the expected return during the same period.
• C)the required return must equal the realized return in all periods.
• D)the expected return must be equal to both the required future return and the past realized return.
• E)the expected future returns must be equal to the required return.

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Definitions:

Credit Sales

Transactions in which goods or services are provided to a customer with an agreement to pay at a later date.

Budgeted Sales

The sales numbers a company projects to achieve in a future period, usually part of financial planning and budgeting.

Gross Margin

The difference between the sales revenue and the cost of goods sold, which shows the profitability of a company’s core activities.

Selling

The process of promoting and transferring ownership of goods or services to customers.