John Requires a 12% Rate of Return on EG Stock

question 16

Multiple Choice

John requires a 12% rate of return on EG stock at a time when investors, on average, are requiring an 11% rate of return on the same stock. Which of the following will happen?

• A) John will have to pay more for the stock than he was willing to pay.
• B) Investors with different required rates of return will pay different prices for the stock.
• C) John will not be able to buy the stock unless the price changes.
• D) John will buy the stock at a lower price.

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