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    Why Investors Demand Higher Expected Rates of Return on Stocks

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    Why do investors demand higher expected rates of return on stocks with more variable rates of return?

    © BrainMass Inc. brainmass.com October 10, 2019, 3:34 am ad1c9bdddf
    https://brainmass.com/business/beta-and-required-return-of-a-project/investors-demand-higher-expected-rates-return-stocks-425631

    Solution Preview

    To answer this question, let's look at two stocks, A and B. A has an expected return of 10% and a volatility of 15%, while B has an expected return of 10% and a volatility of 25%. No investor will buy B, because he would be getting ...

    Solution Summary

    The solution discusses why investors demand higher expected rates of return on stocks.

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