Two Conditions Are Used to Determine Whether or Not a Stock

question 48

True/False

Two conditions are used to determine whether or not a stock is in equilibrium: (1) Does the stock's market price equal its intrinsic value as seen by the marginal investor, and (2) does the expected return on the stock as seen by the marginal investor equal this investor's required return? If either of these conditions, but not necessarily both, holds, then the stock is said to be in equilibrium.

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Definitions:

Class Background

A term referring to the socioeconomic environment and conditions in which an individual is raised, which can influence their beliefs, behaviors, and opportunities.

Racist Attitudes

Prejudiced beliefs or discriminatory behaviors based on racial or ethnic differences.

Deprivation

The state of lacking or being denied access to goods or resources that are considered to be basic necessities in a society.

Brym and Lie

A reference to authors of sociological texts, known for their contributions to the understanding of social phenomena and structures.