In a stable economy, an action of the financial manager that increases the level of expected return without changing risk should reduce share value, and an action that reduces the level of expected return without changing risk should increase share value.

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In a stable economy, investors value consistency and stability over high returns. Therefore, an action that increases the expected return without changing risk may increase the share value rather than reducing it, and vice versa. Other factors, such as market conditions, investor sentiment, and company performance, also play a significant role in determining share value.

In a Stable Economy, an Action of the Financial Manager