The authors write Stock prices soared during the 1990s in th

The authors write \"Stock prices soared during the 1990s in the United States. The Standard & Poor’s 500 index, which summarizes the stock price performance of 500 major companies, rose 60 percent between 1990 and 1995, then more than doubled between 1995 and 2000.\" The U.S. stock market boom in the 1990s can be explained by all of the following except:

the risk premium increased substantially during the 1990s, thereby increasing the total required return and raising stock prices.

as various forms of mutual funds became available, more people invested in these funds, including many who had never owned stock before.

the risk premium that people required to hold stocks fell during the 1990s, thereby lowering the total required return and raising stock prices.

a rise in stock prices could be the result of increased optimism about future dividends and a decrease in the required return.

Solution

a rise in stock prices could be the result of increased optimism about future dividends and a decrease in the required return.

It is just an opinion and not based on facts and figures.