During the coming year, the market risk premium (rm− rf), is expected to remain the same, while the risk-free rate, rf, is expected to fall. Given this forecast, which of the following statements is CORRECT? Group of answer choices The required return will fall for all stocks, but it will fall less for stocks with higher betas. The required return will fall for all stocks, but it will fall more for stocks with higher betas. The required return on all stocks will remain unchanged. The required return for all stocks will fall by the same amount. The required return will increase for stocks with a beta less than 1.0 and will decrease for stocks with a beta greater than 1.0.
During the coming year, the market risk premium (rm− rf), is expected to remain the same, while the risk-free rate, rf, is expected to fall. Given this forecast, which of the following statements is CORRECT? Group of answer choices The required return will fall for all stocks, but it will fall less for stocks with higher betas. The required return will fall for all stocks, but it will fall more for stocks with higher betas. The required return on all stocks will remain unchanged. The required return for all stocks will fall by the same amount. The required return will increase for stocks with a beta less than 1.0 and will decrease for stocks with a beta greater than 1.0.
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 14P
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Question
During the coming year, the market risk premium (rm− rf), is expected to remain the same, while the risk-free rate, rf, is expected to fall. Given this
Group of answer choices
The required return will fall for all stocks, but it will fall less for stocks with higher betas.
The required return will fall for all stocks, but it will fall more for stocks with higher betas.
The required return on all stocks will remain unchanged.
The required return for all stocks will fall by the same amount.
The required return will increase for stocks with a beta less than 1.0 and will decrease for stocks with a beta greater than 1.0.
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