For Markets to Be in Equilibrium, That Is, for There

question 12

Multiple Choice

For markets to be in equilibrium, that is, for there to be no strong pressure for prices to depart from their current levels,

• A) The past realized rate of return must be equal to the expected future rate of return; that is, .
• B) The required rate of return must equal the past realized rate of return; that is, r = .
• C) The expected rate of return must be equal to the required rate of return; that is, = r.
• D) All of the above statements must hold for equilibrium to exist; that is = r = .
• E) None of the above statements is correct.

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Definitions:

Article 2

Part of the Uniform Commercial Code that governs the sale of goods in the United States.

Good Faith

The honest intent to act without taking an unfair advantage over another party in a contractual or negotiation context.

Unconscionable Clauses

Terms in a contract that are deemed so unfair or oppressive that they are unenforceable under law.

Personal Property

Movable items belonging to an individual or entity, as opposed to real estate or real property, including vehicles, furniture, and personal belongings.