Everything else the same a narrowing of the equity risk premium should alert investors to a variety of undervalued stocks.

Name: Everything else the same a narrowing of the equity risk premium should alert investors to a variety of undervalued stocks.
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Question

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A narrowing of the equity risk premium means that the expected return on stocks is decreasing relative to the expected return on bonds. This should make stocks more attractive to investors, leading to an increase in demand and higher prices.

Everything Else the Same a Narrowing of the Equity Risk