Which of the Following Is NOT an Implication Resulting from the Assumption

question 95

Multiple Choice

Which of the following is NOT an implication resulting from the assumption that capital markets are in equilibrium?

• A)All assets are assumed to be bought and sold at the equilibrium price established by supply and demand.
• B)All assets are not correctly priced to adequately compensate investors for the associated risks.
• C)The price for an overpriced asset would eventually fall to an equilibrium level so that the asset is held by all investors.
• D)The market portfolio will be the most efficient portfolio, with respect to the weights attached to the individual securities composing it.

---

Definitions:

Capital

Assets or wealth, whether in the form of money or other resources, that are used or invested to generate income.

Determinant Of Output

Factors that influence the quantity of goods and services an economy can produce, such as labor, capital, technology, and government policies.

Market Prices

The current value at which goods or services are bought and sold in a competitive marketplace.

Economic Growth

An increase in a country's output of goods and services over time, typically measured by the rise in real GDP, which enhances the economy's overall wealth and living standards.