For Markets to Be in Equilibrium (That Is, for There $\overline { \mathrm { r } } = \tilde{ \mathrm { r } }$

question 26

Multiple Choice

For markets to be in equilibrium (that is, for there to be no strong pressure for prices to depart from their current levels) ,

• A) The past realized rate of return must be equal to the expected rate of return; that is,
• \(\overline { \mathrm { r } } = \tilde{ \mathrm { r } }\) .
• B) The required rate of return must equal the realized rate of return; that is, r =
• \(\overline { \mathrm { r } }\) .
• C) All companies must pay dividends.
• D) No companies can be in danger of declaring bankruptcy.
• E) The expected rate of return must be equal to the required rate of return; that is,
• \(\tilde { \mathrm { r } }\) = r.

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