For a Stock to Be in Equilibrium, That Is, for There

question 77

Multiple Choice

For a stock to be in equilibrium, that is, for there to be no long-term pressure for its price to depart from its current level, then

• A) the past realized return must be equal to the expected return during the same period.
• B) the required return must equal the realized return in all periods.
• C) the expected return must be equal to both the required future return and the past realized return.
• D) the expected future returns must be equal to the required return.
• E) the expected future return must be less than the most recent past realized return.

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Definitions:

Marginal Product

The increase in output resulting from an additional unit of input, while keeping other inputs constant.

Total Product

The total quantity of output produced by a firm for a given quantity of inputs.

Maximize Profit

The strategy or process aimed at achieving the highest possible profit from business activities, considering revenues and expenses.

Marginal Productivity

A measure of the extra amount of output that is produced when a unit of input (like labor or capital) is added, with all other inputs held constant.