The higher the required rate of return of an investment,the less an investor will be willing to pay for the investment.

Question

Quizplus · Accepted Answer

This is because a higher required rate of return means that the investor expects to earn a higher return to compensate for the greater risk or opportunity cost of investing in that specific asset, compared to other investments. Therefore, the investor will only be willing to purchase the investment if the price is low enough to achieve the desired rate of return.

The Higher the Required Rate of Return of an Investment,the