Which of the following should cause the price of a share of stock to rise ?
Correct answer: E. All of these answers
- A. None of these answers
- B. An increase in expected dividends
- C. A reduction in aggregate risk
- D. A reduction in the interest rate
- E. All of these answers
Explanation
Share value rises when expected dividends increase, when risk falls, or when the interest rate falls because future payments are discounted less heavily. Therefore all three listed developments support a higher share price.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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