The current expected value of a stock is $32. If investors demand a higher rate of return of 10% instead of the 8% rate of return, what will the impact on the stock price of the firm be??

A. The stock price will increase by 10%.?
B. ?The stock price will not be affected by the change in the rate of return.
C. ?The stock price will increase to $35.
D. ?The stock price will reduce to zero.
E. ?The stock price will decrease.


Answer: E

Business

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