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In equilibrium, the expected rate of return on a stock must equal its required return. However, a number of things can happened to cause the
In equilibrium, the expected rate of return on a stock must equal its required return. However, a number of things can happened to cause the required rate of return to change: (1) the risk-free rate can change because of changes in either real rates or expected inflation . (2) A stock's beta can change. (3) Investors aversion to risk can change
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