The implied equity risk premium is an alternative approach to estimating the expected equity risk premium. It is computed based upon the current equity prices, expected cash flows from owning equities and the risk free rate. Assuming that the risk free rate and growth rate do not change, which of the following statements about the implied equity risk premium is true? a. The implied equity risk premium is always higher than the historical risk premium O b. The implied equity risk premium will increase if stock prices decrease and cash flows decrease as well O c. The implied equity risk premium will increase if stock prices decrease while cash flows increase O d. The implied equity risk premium will increase if stock prices increase Oe. The implied equity risk premium will increase if stock prices decrease Give your reasons 7 A- B I !!! III Assume that you are trying to estimate the cost of equity for verane risk (heta 1) Mexican company in HIS