An increase in investors' required return should cause the value of a common stock to
A) rise
B) fall
C) remain unchanged
D) remain stable or rise slightly

Question

​An increase in investors' required return should cause the value of a common stock to
A) ​rise
B) ​fall
C) ​remain unchanged
D) ​remain stable or rise slightly

Quizplus · Accepted Answer

An increase in investors' required return signifies that they demand higher returns on their investments. As a result, the value of a common stock is perceived to be less attractive, and investors would be less likely to purchase it. This increased selling pressure would cause the stock price to fall.

​An Increase in Investors' Required Return Should Cause the Value

An Increase in Investors' Required Return Should Cause the Value