# Answer to Question #1112 in Finance for Joel Smith

Question #1112

For the stock market to be in equilibrium, that is, for there to be no strong pressure for prices to depart from their current levels,

(Points : 5)

Expected future returns must be equal to required returns ( = r).

The past realized return must be equal to the expected future return ( = ).

The required return must equal the realized return (r = ).

The expected return must be equal to both the required future return and the past realized return (= r = ).

If the expected future return is less than the most recent past realized return, then stocks are most likely to decline.

(Points : 5)

Expected future returns must be equal to required returns ( = r).

The past realized return must be equal to the expected future return ( = ).

The required return must equal the realized return (r = ).

The expected return must be equal to both the required future return and the past realized return (= r = ).

If the expected future return is less than the most recent past realized return, then stocks are most likely to decline.

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