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

question 27

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, \(\overline { \mathrm { r } } = \tilde { \mathrm { r } }\) .
• B)The required rate of return must equal the realized rate of return; that is, r = \(\overline { \mathbf { r } }\) .
• 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, \(\hat { r }\) = r.

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Definitions:

Biological Growth

The process of physical development and increase in size, which occurs in living organisms through cell division and differentiation.

Conservation

In psychology, the understanding that certain properties of objects or substances remain the same even when their appearance changes, a concept developed by Jean Piaget.

Object Permanence

The comprehension that objects remain in place even when they're not visible, audible, or detectable in any sensory manner.

Egocentrism

The inability to differentiate between one's own perspective and another person's perspective, often seen in early childhood development.