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What Are the Components of the Required Rate of Return

question 15

Essay

What are the components of the required rate of return on a share of stock? Briefly explain each component.


Definitions:

Interaction

The reciprocal action or influence between two or more entities or substances, often leading to a specific outcome.

Entitativity

The perception or degree to which a group is seen as a coherent, unified entity.

Coherent

Characterized by a logical, consistent, and orderly connection of parts, making them understandable and clear.

Drive Theory

Zajonc’s theory that the physical presence of members of the same species instinctively causes arousal that motivates performance of habitual behaviour patterns.

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