For a stock to be in equilibrium, that is, for there to be no long-term pressure for its price to depart from its current level, then
A) the past realized return must be equal to the expected return during the same period.
B) the required return must equal the realized return in all periods.
C) the expected return must be equal to both the required future return and the past realized return.
D) the expected future returns must be equal to the required return.
E) the expected future return must be less than the most recent past realized return.

Question

Quizplus · Accepted Answer

For a stock to be in equilibrium, the expected future returns must equal the required return. This balance ensures that the demand for the stock is equal to its supply, preventing long-term pressure on its price to change.

For a Stock to Be in Equilibrium, That Is, for There