In the One-Period Valuation Model,an Increase in the Required Return

question 30

Multiple Choice

In the one-period valuation model,an increase in the required return on investments in equity

• A)increases the expected sales price of a stock.
• B)increases the current price of a stock.
• C)reduces the expected sales price of a stock.
• D)reduces the current price of a stock.

---

Definitions:

Marginal Costs

The added expense to produce one more item; it can decrease or increase depending on production size and efficiency.

Marginal Benefits

The boost in satisfaction or usefulness derived from the consumption of an additional unit of a good or service.

Rational Individuals

People who make decisions by logically evaluating options based on their preferences and the likely outcomes to maximize their benefit or utility.

Production Possibilities Curve

A graphical representation that shows the maximum quantity of two products that can be produced within a given set of resources, highlighting the trade-offs and opportunity costs.