A decrease in the reward for bearing systematic risk will always decrease a firm's cost of equity, when calculated using the SML approach.

Name: A decrease in the reward for bearing systematic risk will always decrease a firm's cost of equity, when calculated using the SML approach.
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Question

Quizplus · Accepted Answer

A decrease in the reward for bearing systematic risk will make investors less willing to hold risky assets, which will lead to an increase in the required return on equity for all firms.

A Decrease in the Reward for Bearing Systematic Risk Will