The Required Rate of Return

question 66

Multiple Choice

The required rate of return:

• A) is used as the discount rate when valuing an asset's expected cash flows.
• B) is increased when an asset's cash flows are considered to be riskier.
• C) is a fixed rate that remains the same for all investors regardless of changes in the market.
• D) Both (a)and (b)
• E) All of the above

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Definitions:

Dual

Pertaining to or involving two parts, elements, or aspects.

Stock Classes

Different types of shares that a company can issue, each of which might have specific rights, privileges, or voting powers.

Capital Gains

The financial gain achieved when the selling price of an asset or investment surpasses its original buying price.

Appreciate

To increase in value or price over time.