If a company's stock price (Po) goes up, and nothing else changes, K_e (the required rate of return) should A) go up. B) go down. C) remain unchanged. D) need more information.

Question

Quizplus · Accepted Answer

If the stock price increases and nothing else changes, the expected return (dividends or growth) relative to the price decreases, leading to a lower required rate of return.

If a Company's Stock Price (Po) Goes Up, and Nothing