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Increased uncertainty resulting from the global financial crisis ________ the requiredreturn on investment in equity.A) raisedB) loweredC) had no impact onD) decreased

Question

Increased uncertainty resulting from the global financial crisis ________ the requiredreturn on investment in equity.A) raisedB) loweredC) had no impact onD) decreased

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Solution

The correct answer is A) raised.

Here's why:

  1. The global financial crisis increased uncertainty in the market.
  2. This uncertainty means that there is a higher risk associated with investments, as the outcomes are less predictable.
  3. In order to compensate for this increased risk, investors require a higher return on their investments. This is because they want to ensure that they are adequately compensated for the risk they are taking on.
  4. Therefore, the required return on investment in equity would have been raised.

This problem has been solved

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