If markets are in equilibrium, which of the following conditions will exist?
A) each stock's expected return should equal its required return as seen by the marginal investor.
B) all stocks should have the same expected return as seen by the marginal investor.
C) the expected and required returns on stocks and bonds should be equal.
D) all stocks should have the same realized return during the coming year.
E) each stock's expected return should equal its realized return as seen by the marginal investor.

Question

Quizplus · Accepted Answer

Statement a is true, because if the expected return does not equal the required return, then markets are not in equilibrium.

If Markets Are in Equilibrium, Which of the Following Conditions