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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

For a stock to be in equilibrium, what two conditions must hold?

Summary Introduction

To explain: The two conditions that must hold, for stock to be in equilibrium.

Introduction:

Stock:

Stock is an asset for the investors and a liability for the company. A stock is a kind of investment made by the investors, who want to get more returns. An investor holds the ownership right after the purchase of a stock of the respective company.

Explanation
  • As per the investor’s view, they always want a high expected return, so that they get more earnings. The equilibrium is achieved only when expected return is equal to the required rate of return...

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