View source for Financial equilibrium

[[Financial equilibrium]] (or, simply, [[equilibrium]]) is the condition under which the intrinsic value of a security is equal to its price; also, when a security's expected return is equal to its required return.


==Definitions==
According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]],
:[[Equilibrium]]. The condition under which the intrinsic value of a security is equal to its price; also, when a security's expected return is equal to its required return.
According to [[Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition)]],
:[[Equilibrium]]. The situation in which the actual market price equals the intrinsic value, so investors are indifferent between buying and selling a stock.
According to [[Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition)]],
:[[Equilibrium]]. The condition under which the expected return on a security is just equal to its required return, r⁄i 5 ri. Also, P0 5 P⁄0, and the price is stable.

==Related concepts==
*[[Financial management]]. A combination of [[enterprise effort]]s undertaken in order to procure and utilize monetary resources of the [[enterprise]].

==Related lectures==
*[[Introduction to Financial Management]]. 

[[Category: Financial Management]][[Category: Articles]]