Vidyalelo
Commerce · Q808

Financial Management

Graduate and Post Graduate · Commerce · question 808

Q808

When changes in patents and industry competition occur, required rate of return

A.
changes
B.
does not change
Answer
C.
becomes zero
D.
becomes one

Answer: Option B

Solution

Answer: Option B
Solution:
When changes in patents and industry competition occur, required rate of return does not change. The required rate of return is the minimum return an investor expects to achieve by investing in a project. An investor typically sets the required rate of return by adding a risk premium to the interest percentage that could be gained by investing excess funds in a risk-free investment.