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If the market risk premium were to increase everything else beign equal the value of common stock would do what?
Wiki User
∙ 11y ago
Value of the common stock will go down.
As market becomes riskier market participants adjust expected risk premium and start to demand higher returns, consequently they begin to sell stocks as they do not satisfy their newly adjusted expected risk premium. As a result stock price goes down.
Wiki User
∙ 11y ago
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