What can be expected to happen when stocks having the same expected risk do not have the same expected return?
A)at least one of the stocks becomes temporarily mispriced
B)this is a common occurrence indicating that one stock has more PRESENT VALUE OF GROWTH OPPORTUNITIES
C)this cannot happen if the shares are traded in an auction market
D)the expected risk levels will change until the expected returns are equal

Question

Quizplus · Accepted Answer

If stocks with the same expected risk do not have the same expected return, it indicates a discrepancy in the market, and at least one of the stocks is temporarily mispriced. This creates an opportunity for investors to buy or sell the mispriced stock in the hopes of profiting when the market corrects itself.

What Can Be Expected to Happen When Stocks Having the Same