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Select the answer that most appropriately describes the relationship between expected returns and stock prices. a. When risk increases, expected returns increase, which causes prices
Select the answer that most appropriately describes the relationship between expected returns and stock prices. a. When risk increases, expected returns increase, which causes prices to decrease. b. When risk decreases, expected returns decrease, which causes prices to decrease. c. When risk decreases, expected returns increase, which causes prices to decrease. d. When risk increases, expected returns decrease, which cause prices to decrease. e. Price equals the present value of future cash flows. Therefore, prices are unrelated to expected returns
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