[20] 1. Use the efficient market theory (all investors have the same expectations; dividends and taxes equal 0). Suppose the interest rate on the bond is fixed at 7% and the risk premium is fixed at 3%. Using numbers and the time diagram, explain how an exogenous decrease in the expected future stock price from 110 to 88 affects the stock price and the expected return on the stock in the very short run. [20] 1. Use the efficient market theory (all investors have the same expectations; dividends and taxes equal 0). Suppose the interest rate on the bond is fixed at 7% and the risk premium is fixed at 3%. Using numbers and the time diagram, explain how an exogenous decrease in the expected future stock price from 110 to 88 affects the stock price and the expected return on the stock in the very short run