For a Stock to Be in Equilibrium, Two Conditions Are

question 130

True/False

For a stock to be in equilibrium, two conditions are necessary: (1) The stock's market price must equal its intrinsic value as seen by the marginal investor and (2) the expected return as seen by the marginal investor must equal this investor's required return.

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Definitions:

ROM

Acronym for Read-Only Memory, a type of non-volatile storage medium that permanently stores data on personal computers and other electronic devices.

RAM

See random-access memory.

Local Vendor

A local individual or business that sells goods or services in a specific area or community.

Supply Companies

Businesses that provide materials, equipment, and supplies to consumers, businesses, or other organizations.