An increase in a firm's risk will always result in a higher share price since the stockholder must be compensated for the greater risk.

Question

Quizplus · Accepted Answer

An increase in a firm's risk could cause the value of the firm to potentially decrease, which would lead to a decrease in its share price. The relationship between a firm's risk and its share price is not always straightforward and can be influenced by various factors.

An Increase in a Firm's Risk Will Always Result in a Higher