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7. During the coming year, the market risk premium (rM ? rRF), is expected to fall, while the risk-free rate, rRF, is expected to remain
7. During the coming year, the market risk premium (rM ? rRF), is expected to fall, while the risk-free rate, rRF, is expected to remain the same. Given this forecast, which of the following statements is CORRECT? A The required return will increase for stocks with a beta less than 1.0 and will decrease for stocks with a beta greater than 1.0. B The required return on all stocks will remain unchanged. C The required return will fall for all stocks, but it will fall more for stocks with higher betas. D The required return for all stocks will fall by the same amount. E The required return will fall for all stocks, but it will fall less for stocks with higher betas
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