If the Optimal Forecast of the Return on a Security

question 22

Multiple Choice

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

• A) the market is inefficient.
• B) an unexploited profit opportunity exists.
• C) the market is in equilibrium.
• D) only A and B of the above are true.
• E) only B and C of the above are true.