If a Stock's Expected Return as Seen by the Marginal

question 5

True/False

If a stock's expected return as seen by the marginal investor exceeds this investor's required return, then the investor will buy the stock until its price has risen enough to bring the expected return down to equal the required return.

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Definitions:

Conglomerate Acquisition

A type of corporate action in which a company purchases another company that operates in a completely different industry.

Horizontal Acquisition

The purchase of a company operating at the same level of the value chain in similar or different industries to increase market share.

Vertical Acquisition

A corporate strategy where a company acquires another company in the same supply chain.

Conglomerate Acquisition

The process by which a large corporation, often with diversified interests, acquires another company often in an unrelated industry to diversify its holdings.