Quiz Ch 09 – T/F Stock Equilibrium Criteria
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: To establish stock equilibrium, two criteria are considered: (1) Does the stock’s market price match the intrinsic value perceived by the marginal investor, and (2) Does the expected return on the stock viewed by the marginal investor correspond to this investor’s required return? If either of these criteria (not necessarily both) is met, the stock is deemed in equilibrium.