For markets to be in equilibrium,that is,for there to be no strong pressure for prices to depart from their current levels,
A) The expected rate of return must be equal to the required rate of return;that is,

$\tilde r$ =$r$ .
B) The past realized rate of return must be equal to the expected future rate of return;that is,

$\bar r$ =$\tilde r$ .
C) The required rate of return must equal the past realized rate of return;that is,$r$ =$\bar r$ .
D) All three of the above statements must hold for equilibrium to exist;that is$\tilde r$ =$r$ =$\bar r$ .
E) None of the above statements is correct.

Question

For markets to be in equilibrium,that is,for there to be no strong pressure for prices to depart from their current levels,
A) The expected rate of return must be equal to the required rate of return;that is,

$\tilde r$ =$r$ .
B) The past realized rate of return must be equal to the expected future rate of return;that is,

$\bar r$ =$\tilde r$ .
C) The required rate of return must equal the past realized rate of return;that is,$r$ =$\bar r$ .
D) All three of the above statements must hold for equilibrium to exist;that is$\tilde r$ =$r$ =$\bar r$ .
E) None of the above statements is correct.

Quizplus · Accepted Answer

For markets to be in equilibrium, the expected rate of return ($\tilde r$) must equal the required rate of return ($r$). This condition ensures that investors are satisfied with the current price levels, as their expectations align with what is required for a satisfactory return, leading to no strong pressure for prices to change.

For Markets to Be in Equilibrium,that Is,for There to Be r~\tilde rr~

For Markets to Be in Equilibrium,that Is,for There to Be $\tilde r$