Suppose a Stock Has the Same Expected Rate of Return

question 49

Multiple Choice

Suppose a stock has the same expected rate of return as a bank account. Then

• A)individuals will choose indifferently between the stock and the bank account.
• B)there will be an excess supply of the stock and its price will fall.
• C)risk-averse individuals will prefer the stock.
• D)there will be an excess supply of the stock and its price will rise.
• E)there will be an excess demand for the stock and its price will rise.

---

Definitions:

Impair

To weaken or damage something, especially in terms of function or quality.

PlayStation

A brand of video game consoles developed and marketed by Sony Interactive Entertainment.

Threatened

Feeling or appearing to be in danger of harm, damage, or loss.

Bullying

Repeated, systematic efforts to inflict harm on other people through physical, verbal, or social attack on a weaker person.