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.
Correct Answer:
Verified
Q105: Suppose a stock has a lower expected
Q106: What is the expected return on a
Q107: A risk-reverse person always chooses the investment
Q108: Suppose a stock has a higher expected
Q109: The equilibrium risk-return curve for a risk-neutral
Q111: As the risk of an investment increases,
Q112: In the long run, the rate of
Q113: Which of the following investments offer the
Q114: The equilibrium risk-return relationship for a risk-averse
Q115: Suppose a stock has the same expected
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents