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

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Definitions:

Ladder Rung Notes

Annotations added to the rungs of a ladder diagram to provide information or instructions.

Motor Control Notes

Documentation or information related to the operation, design, and troubleshooting of motor control systems.

Rails

In electrical or electronic contexts, rails often refer to conductive paths that supply power to various components within a system.

Rungs

Horizontal lines in ladder diagrams that represent electrical circuits.