Comparing a stock's required return (RR)to its expected return (ER),we can say
A)the stock is a good buy when they are equal.
B)that each represents a different concept and,so,they may have quite different values.
C)they are simply different perspectives on the same concept and,so,they should have the same value.
D)the stock is a good buy only when RR is greater than ER.

Question

Quizplus · Accepted Answer

The required return (RR) and expected return (ER) are two different concepts and therefore may have quite different values. The required return is the minimum return that investors require from an investment considering the level of risk associated with it. On the other hand, the expected return is the return that an investor expects to earn from an investment based on the available information. So, it is possible that the required return may be higher or lower than the expected return depending on the risk associated with the investment and the market conditions.

Comparing a Stock's Required Return (RR)to Its Expected Return (ER),we