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Suppose a Stock Has the Same Expected Rate of Return

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Suppose a stock has the same expected rate of return as a bank account. Explain why this is not an equilibrium situation.


Definitions:

Avoidance

A strategy or behavior aimed at steering clear of a situation, condition, or confrontation.

Unassertive

Characterized by a lack of assertiveness; often hesitant or showing a reluctance to express opinions or claim rights.

Compromise

A method of resolving disagreement that involves mutual concessions and agreement on a course of action that is acceptable to all parties involved.

Cooperativeness

The willingness to work together towards common goals or interests.

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