For a Stock to Be in Equilibrium, That Is, for There

question 25

Multiple Choice

For a stock to be in equilibrium, that is, for there to be no long-term pressure for its price to depart from its current level, then

• A) the expected future return must be less than the most recent past realized return.
• B) The past realized return must be equal to the expected return during the same period.
• C) the required return must equal the realized return in all periods.
• D) the expected return must be equal to both the required future return and the past realized return.
• E) the expected future returns must be equal to the required return.

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Definitions:

Pairs of Socks

Articles of clothing worn on the feet, typically coming in matching sets of two, one for each foot.

Linear Production

A production process that assumes a direct, constant relationship between inputs and outputs, often illustrated with a straight-line production function.

Green Beans

A type of common vegetable, long and slender, typically harvested while still young and tender.

Normative Economics

A branch of economics that focuses on what ought to be or what should be, often based on value judgments and opinions.