During next year, the expected market return (R m ) is expected to fall, while the risk-free
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During next year, the expected market return (Rm) is expected to fall, while the risk-free rate (Rf) is expected to remain the same. Given this forecast, which is correct?
A - the required return will fall for all stocks, but it will fall LESS for stocks with higher betas
B - the required return for all stocks will fall by the same amount
C - the required return will fall for all stocks, but it will fall MORE for stocks with higher betas
D - 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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