Question 8 Suppose the expected market risk premium (EMRP) suddenly increases All else the same, which of the following is most likely to be correct Select the best answer EMRP may have increased due to an increase in the markets risk tolerance Stock prices would decline The slope of the Security Market Line would decline EMRP may have increased due to a decline in systematic risk in the economy Stocks expected returns would decline

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Question: Question 8 Suppose the expected market risk premium (EMRP) suddenly increases. All else the same, which of the following is most likely to be correct?

Question 8

Suppose the expected market risk premium (EMRP) suddenly increases. All else the same, which of the following is most likely to be correct? Select the best answer.

		EMRP may have increased due to an increase in the markets risk tolerance.
		Stock prices would decline.
		The slope of the Security Market Line would decline.
		EMRP may have increased due to a decline in systematic risk in the economy.
		Stocks expected returns would decline

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