In an efficient market,the cost of equity for a risky firm does which one of the following according to the security market line?
A) Produces a return that will be less than the market rate but higher than the risk-free rate
B) Equals the market rate of return for all stocks
C) Has a maximum cost equal to the market rate of return
D) Decreases as the beta of the firm's stock increases
E) Increases in direct relation to the stock's systematic risk
Correct Answer:
Verified
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