If the Optimal Forecast of the Return on a Security

question 22

Multiple Choice

If the optimal forecast of the return on a security exceeds the equilibrium return,then

• A) the market is inefficient.
• B) an unexploited profit opportunity exists.
• C) the market is in equilibrium.
• D) only A and B of the above are true.
• E) only B and C of the above are true.

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Definitions:

Pent-up Emotions

Emotions that have been suppressed or not expressed, often leading to increased tension or stress.

Adaptive Coping

Strategies that are effectively used to manage or reduce stress through positive actions, thought processes, and emotional responses.

Constructive Coping

Efforts to deal with stressful events that are judged to be relatively healthful.

Appraisal-focused

Refers to coping strategies that involve changing the way one thinks about a stressor or challenge.