Assuming That All Else Remains Equal, When People Become More

question 172

Multiple Choice

Assuming that all else remains equal, when people become more optimistic about a company's future, what is most likely to happen to the company's stock?

• A) The supply of the stock and the price will both rise.
• B) The supply of the stock and the price will both fall.
• C) The demand for the stock and the price will both rise.
• D) The demand for the stock and the price will both fall.

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Definitions:

Fair Value

The agreed-upon price for transferring ownership of an asset or the cost to pass on a liability in a formalized exchange within the marketplace at the time of measure.

Maintenance Expenditures

Funds spent on keeping property, equipment, or machinery in operating condition.

Legal Provisions

Conditions or requirements stated in legal documents, such as laws or contracts.

Equity in Subsidiary Earnings

The portion of income attributable to the parent company from its investment in subsidiaries, after intercompany transactions have been eliminated.