1.Investors demand higher expected returns from stockswith returns that are high

Question

1.Investors demand higher expected returns from stockswith returns that are highly exposed to macroeconomicchanges
2.Investors demand higher expected rates of return fromstocks with returns that are highly very sensitive tofluctuations in the stock market
true or false, please explain 1.Investors demand higher expected returns from stockswith returns that are highly exposed to macroeconomicchanges
2.Investors demand higher expected rates of return fromstocks with returns that are highly very sensitive tofluctuations in the stock market
true or false, please explain

Explanation / Answer

1.Investors demand higher expected returns from stockswith returns that are highly exposed to macroeconomicchanges
False!
Investors demand high returns, but they should be highly exposedwith stable economy, if the economy of an state will change, thenfluctuations in the return begins, and it may involve high amountof risk!

2.Investors demand higher expected rates of return fromstocks with returns that are highly very sensitive tofluctuations in the stock market
True!
Yes, Investors demand high returns, and which should be highlysensitive to fluctuations, because investor don't like fluctuationsin the returns, as fluctuations means high standard deviation whichshows high risk involved!

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