The steeper the demand curve for a firm's stock,the closer the values of r_s and r_e are to one another,other things held constant.

Question

Quizplus · Accepted Answer

A steeper demand curve for a firm's stock indicates a less elastic demand, which means the price is more sensitive to changes in quantity. This does not directly relate to the values of r_s and r_e being closer to one another, as these values would depend on factors such as risk and expected returns, not the elasticity of the demand curve for the stock.

The Steeper the Demand Curve for a Firm's Stock,the Closer