If the market risk premium were to increase, the value of common stock (everything else being equal)
Question:
a. Not change because this does not affect stock values.
b. Increase in order to compensate the investor for increased risk.
c. Increase due to higher risk-free rates.
d. Decrease in order to compensate the investor for increased risk.
e. Decrease due to lower risk-free rates?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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d Decrease in order to compensate the investor for in...View the full answer
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