A Rise in Stock Prices ________ the Net Worth of Firms

question 31

Multiple Choice

A rise in stock prices ________ the net worth of firms and so leads to ________ investment spending because of the reduction in moral hazard.

• A)raises;higher
• B)raises;lower
• C)reduces;higher
• D)reduces;lower

---

Definitions:

Stockbroker

A professional who buys and sells stocks and other securities on behalf of clients in exchange for a fee or commission.

Overjustification Effect

A psychological phenomenon where external rewards can reduce intrinsic motivation for a task, due to the individual attributing their behavior to the reward rather than their own interest.

Extrinsic Rewards

Benefits given by an external source, such as money, grades, or praise, which are used to motivate certain behaviors.

Intrinsic Enjoy

Finding inherent satisfaction and pleasure in an activity, regardless of external rewards or outcomes.