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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

A company faces two kinds of risk. A firm-specific risk is that a competitor might enter its market and fake some of its customers. A market risk is that the economy might enter a recession, reducing sales. Which of these two risks would more likely cause the company’s shareholders to demand a higher return? Why?

To determine

When the shareholder will demand high return.

Explanation

Generally, the economy faces two kinds of risks: firm-specific risk and market-specific risk. The shareholder will demand high return for ...

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