Question: A decrease in risk aversion would cause a ______ in required return. [Reminder: Rs = Rrf + B (Rm - Rrf).....Aka required return = risk

  1. A decrease in risk aversion would cause a ______ in required return. [Reminder: Rs = Rrf + B (Rm - Rrf).....Aka required return = risk free rate + B * (market return - risk-free rate).....also MRP = Rm - Rrf......aka market risk premim = market return - risk-free rate ]

Increase

Decrease

No change

Percentage returns because they are more honest.

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