What Can Be Expected to Happen When Stocks Having the Same

question 3

Multiple Choice

What can be expected to happen when stocks having the same expected risk do not have the same expected return?

• A)at least one of the stocks becomes temporarily mispriced
• B)this is a common occurrence indicating that one stock has more PRESENT VALUE OF GROWTH OPPORTUNITIES
• C)this cannot happen if the shares are traded in an auction market
• D)the expected risk levels will change until the expected returns are equal

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Definitions:

Malignant Cells

Abnormal cells that divide uncontrollably and have the potential to invade other tissues, leading to cancer.

Neoplasm

An abnormal growth of tissue, which can be benign or malignant, resulting from uncontrolled cell division.

Oncogene

A gene that has the potential to cause cancer by transforming a normal cell into a tumor cell when mutated or expressed at high levels.

Telomeres

Protective caps at the ends of chromosomes that prevent the loss of genetic information during cell division and play a role in aging and cancer.