If the optimal forecast of the return on a security exceeds the equilibrium return,then
A) the market is inefficient.
B) an unexploited profit opportunity exists.
C) the market is in equilibrium.
D) only A and B of the above are true.
E) only B and C of the above are true.

Question

Quizplus · Accepted Answer

If the optimal forecast of the return on a security exceeds the equilibrium return, then an unexploited profit opportunity exists (B) and the market is inefficient (A).

If the Optimal Forecast of the Return on a Security