If Expected Return Is Less Than Required Return on an Asset

question 6

Multiple Choice

If expected return is less than required return on an asset, rational investors will ________.

• A) buy the asset, which will drive the price up and cause expected return to reach the level of the required return
• B) sell the asset, which will drive the price down and cause the expected return to reach the level of the required return
• C) sell the asset, which will drive the price up and cause the expected return to reach the level of the required return
• D) buy the asset, since price is expected to increase

---

Definitions:

Hayflick Limit

The number of times a human cell is capable of dividing into two new cells. The limit for most human cells is approximately 50 divisions, an indication that the lifespan is limited by our genetic program.

Cells

The basic structural, functional, and biological units of all living organisms, serving as the building blocks of life.

Divide

To separate or split something into parts or to share among several.

Universal Design

The creation of settings and equipment that can be used by everyone, whether or not they are able-bodied and sensory-acute.