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:

Terminal Values

Values likely to maintain a high priority throughout your life.

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To act in a manner according to one's character, or to conduct oneself in a specific way, often judged in the context of socially acceptable norms.

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A state of well-being and contentment characterized by emotions ranging from contentment to intense joy.

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A mental state that reflects optimism and a belief in positive outcomes.