If investors in the market become more pessimistic,it is expected that the required return will ----------.
A)decrease.
B)increase.
C)stay the same.
D)there is not enough information to answer the question.

Question

Quizplus · Accepted Answer

When investors become more pessimistic, they perceive the market as riskier. To compensate for the higher risk, they demand a higher return on their investment, which leads to an increase in the required return.

If Investors in the Market Become More Pessimistic,it Is Expected