A Stock to Be in Equilibrium, Two Conditions Are Necessary

question 49

True/False

a stock to be in equilibrium, two conditions are necessary: (1) The stock's market price must equal its intrinsic value as seen by the marginal investor and (2) the expected return as seen by the marginal investor must equal this investor's required return.

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Definitions:

Standard Normal Random Variable

A random variable that follows a standard normal distribution.

Area

The extent or measurement of a surface or piece of land.

z

Often represents a standard score in statistics, indicating how many standard deviations an element is from the mean.

Standard Normal Distribution

The standard normal distribution is a normal distribution with a mean of 0 and a standard deviation of 1, used in probability theory to represent real-valued random variables with unknown distributions.