The required return for a common stock is defined as the:
A) expected return based on probabilities assigned to different scenarios.
B) maximum expected return based on estimates of its cash flows.
C) minimum expected return necessary to induce an investor to purchase the stock.
D) mean return for the stock over the past ten years.

Question

Quizplus · Accepted Answer

The required return for a common stock is the minimum expected return necessary to induce an investor to purchase the stock, reflecting the compensation needed for the risk taken.

The Required Return for a Common Stock Is Defined as The