If the expected return were above the required return, investors would buy the asset, driving its price up and its expected return down.

Name: If the expected return were above the required return, investors would buy the asset, driving its price up and its expected return down.
Brand: Quizplus
Rating: 4.9 (37 reviews)

Question

Quizplus · Accepted Answer

When the expected return is higher than the required return, investors are incentivized to buy the asset, increasing demand and price, which in turn lowers the expected return until it aligns with the required return.

If the Expected Return Were Above the Required Return, Investors