An increase in the required return on the market will tend to decrease stock valuations.

Question

​An increase in the required return on the market will tend to decrease stock valuations.

Quizplus · Accepted Answer

An increase in the required return on the market indicates that investors perceive the market to be more risky, which means they will demand a higher return on their investments. This increase in required return will lead to a decrease in stock valuations as investors will be willing to pay less for each dollar of expected earnings due to the higher risk.

​An Increase in the Required Return on the Market Will

An Increase in the Required Return on the Market Will