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:

Certainty

A condition of being sure about something or having absolute conviction in the truth of facts, often considered in decision-making processes.

Sources Of Change

Various factors or entities that initiate or drive alterations within an organization, market, or environment, including technological advancements, market trends, or legislative changes.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, often resulting in global economic policy and cultural exchange.

Mismanagement

The ineffective, inefficient, or detrimental handling of administrative and organizational tasks, often leading to adverse effects on the entity's operations.