If the Optimal Forecast of the Return on a Security

question 89

Multiple Choice

If the optimal forecast of the return on a security exceeds the equilibrium return,then

• A)the market is inefficient.
• B)no unexploited profit opportunities exist.
• C)the market is in equilibrium.
• D)the market is myopic.

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Definitions:

Prematurely

Occurring or done before the usual or proper time, often implying a negative outcome or risk.