If Markets Are Truly Efficient and in Equilibrium

question 52

Multiple Choice

If markets are truly efficient and in equilibrium

• A)all securities would lie on the SML.
• B)any security that plots below the SML would be considered undervalued.
• C)any security that lies above the SML would be considered overvalued.
• D)no security would lie on the SML..

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Definitions:

Coercive Power

The ability of a person to force others to comply with demands or obey orders through the threat of punishment or negative consequences.

Reward Power

The ability to influence others' behavior through the control of valued resources or rewards, a key aspect of leadership and organizational dynamics.

Political Behaviors

Actions by individuals or groups within an organization that are aimed at acquiring, developing, and using power and other resources to obtain one’s preferred outcomes.

Preferred Outcomes

Desired results or goals that individuals or organizations aim to achieve.