Question: For example, if a companys bonds had an interest rate of 7 percent, investors would invest in its stock only if they expected that the

For example, if a company’s bonds had an interest rate of 7 percent, investors would invest in its stock only if they expected that the return on stock would be [at least 7 percent / considerably more than 7 percent]. (The expected return on stock consists of both expected dividends and an expected increase in the market value of the stock.)

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