For a Stock to Be in Equilibrium,two Conditions Are Necessary

question 42

True/False

For a stock to be in equilibrium,two conditions are necessary: (1)The stock's market price must equal its intrinsic value as seen by the marginal investor,and (2)the expected return as seen by the marginal investor must equal his or her required return.

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Definitions:

Financial Relationships

The analysis and assessment of the connections between various financial metrics and entities, including investments, expenses, revenues, and profits.

Financial Theory

A branch of economics that aims to understand and explain how financial markets operate, the structure of capital markets, and the pricing of financial instruments.

Economics

The social science that studies how people use scarce resources to produce valuable commodities and distribute them among different people.

Mathematics

Mathematics is the abstract study of numbers, quantity, structure, space, and change, used as a tool in a wide range of disciplines.