Question

If markets are in equilibrium, which of the following conditions will exist? A. Each stock's expected return should equal its required return B. The expected returns on stocks and bonds should be equal C. All stocks should have the same realized return during the coming year D. Each stock's expected return should equal its realized return E. All of the above.

Answer 1

Answer:

A

Explanation:

Remember, in economics the term equilibrium implies that this terms

• price and,
• quantity demanded

are all equal or in a state of stability.

Therefore, the stock in such an equilibrium market would yield it expected returns since there are no external factors such as increase in price that could affect the value.