Two conditions are used to determine whether a stock is in equilibrium: (1) Does the stock's market price equal its intrinsic value as seen by the marginal investor, and (2) does the expected return on the stock as seen by the marginal investor equal his or her required return? If either of these conditions, but not necessarily both, holds, then the stock is said to be in equilibrium.
Answer the following statement true (T) or false (F)
False
Rationale: If one condition holds, then the other must also hold.
You might also like to view...
What changes did the Dodd-Frank Wall Street Reform and Consumer Protection Act make to reform lending regulation?
What will be an ideal response?
At the end of 2005, Phil had a net worth of $10,000. During 2008, he plans to save $2,000 and he also expects the market value of his assets to increase by 5%
If Phil's total liabilities were $4,000 at December 31, 2007, his December 31, 2008 net worth will be A) $12,000. B) $12,500. C) $12,700. D) $12,800.
Since a putable bond gives its holder the right to "put the bond" at specified times or because of specified actions by the issuing firm, the bond's yield would be lower than that of an otherwise equivalent non-putable bond
Indicate whether the statement is true or false
Acme, Inc., produces widgets. To manufacture a new type of widget, it took 51 hr for the first widget. Acme estimates it has an 85% learning rate. Using the logarithmic approach, calculate the time it will take to manufacture the 148th widget.
A. 16.24 hr B. 15.86 hr C. 19.52 hr D. 16.94 hr