What Can Be Expected to Happen When Stocks Having the Same

question 78

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 PVGO.
• 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:

Employee Retirement Income Security Act

A federal law that sets minimum standards to ensure that voluntary, private industry pension and health plans are established and maintained in a fair and financially sound manner.

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