Multiple Choice
Suppose a stock has the same expected rate of return as a bank account. Then
A) individuals will choose indifferently between the stock and the bank account.
B) there will be an excess supply of the stock and its price will fall.
C) risk-averse individuals will prefer the stock.
D) there will be an excess supply of the stock and its price will rise.
E) there will be an excess demand for the stock and its price will rise.
Correct Answer:
Verified
Correct Answer:
Verified
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