A stock's market value will be higher the higher the investor's required rate of return is,all else being equal.

Question

Quizplus · Accepted Answer

The opposite is true. A stock's market value will be lower the higher the investor's required rate of return is, all else being equal. This is because a higher required rate of return means the investor needs to be compensated with a higher future return, and this lowers the present value of the stock's future cash flows.

A Stock's Market Value Will Be Higher the Higher the Investor's