Question: If expected return is less than required return on an asset, rational investors will do which of the following? Buy the asset, which will drive
If expected return is less than required return on an asset, rational investors will do which of the following?
Buy the asset, which will drive the price up and cause expected return to reach the required return.
Sell the asset, which will drive the price down and cause the expected return to rise.
Sell the asset, which will drive the price up and cause the expected return to drop.
Buy the asset since price is expected to increase.
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