For Markets to Be in Equilibrium (That Is,for There to Be

question 21

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 past realized rate of return must be equal to the expected rate of return; that is, .
• B) The required rate of return must equal the realized rate of return; that is, r = .
• C) All companies must pay dividends.
• D) No companies can be in danger of declaring bankruptcy.
• E) The expected rate of return must be equal to the required rate of return; that is, = r.

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Definitions:

Goods

Items or merchandise that are manufactured or produced for sale.

Chattel Mortgage

A loan agreement where personal movable property is used as collateral for the loan, and the borrower retains possession of the property while repaying the loan.

Pledge

A commitment or security interest, especially in the context of a pledge of assets as collateral for a loan.

Deed of Trust

A legal document used in some states that involves a trustor, a trustee, and a lender (beneficiary), outlining the terms of a real estate transaction and placing the property as security for a loan.