What can be expected to happen when stocks having the same expected risk do not have the same expected return?

chinnu: What can be expected to happen when stocks having the same expected risk do not have the same expected return?
What can be expected to happen when stocks having the same expected risk do not have the same expected return?
OPTIONS ARE:
A) At least one of the stocks becomes temporarily mispriced.
B) This is a common occurrence indicating that one stock has more PVGO.
C) This cannot happen if the shares are traded in an auction market.
D) The expected risk levels will change until the expected returns are equal.

Answers and Views:

Answer by Tony M
stock price is a function of expected future returns adjusted for expected future risk. so as returns increase stock price increases. as risk increases stock price falls. so if to stocks have the same risk, the one with the lower risk will have the higher price. ( not familiar with the term PVGO ) (future is the expected time hold the stock)

Answer by Harvey DEntist
they go up
it s probaly better to say they correct themselves.
so the answer is A

Answer by what?
whoever wrote this question is an idiot.

a is “right” even though it is very poorly worded.

it doesn’t BECOME mispriced, it IS mispriced.