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

question 100

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

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