If the ROE on a new investment is less than the firm's required rate of return [blank].

Question

Quizplus · Accepted Answer

The required rate of return is the minimum return that investors expect from a company. If the ROE on a new investment is less than the required rate of return, it means that the investment is not generating enough profit to meet investor expectations. This will result in a decrease in the firm's value, as investors will not be willing to pay as much for the company's shares.

If the ROE on a New Investment Is Less Than