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

question 22

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 future rate of return; that is,
• \(\overline { \mathrm { r } } = \hat { \mathrm { r } }\) .
• B) The required rate of return must equal the past realized rate of return; that is, r =
• \(\overline { \mathrm { r } }\) .
• C) The expected rate of return must be equal to the required rate of return; that is,
• \(\tilde { \mathrm { r } }\) = r.
• D) All of the above statements must hold for equilibrium to exist; that is
• \(\tilde { \mathrm { r } }\) = r =
• \(\tilde { \mathrm { r } }\) .
• E) None of the above statements is correct.

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