The High, Inflated Stock Prices That Occur During Stock Market

question 101

Multiple Choice

The high, inflated stock prices that occur during stock market bubbles are often driven by investor optimism and:

• A) increased corporate earnings.
• B) a low unemployment rate.
• C) changes in government regulation.
• D) irrational exuberance.
• E) economic turmoil.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials used in production and the expected cost under standard costing.

Raw Materials

Basic materials that are used in the production process of manufacturing goods, which are then converted into finished products.

Standard Cost

A predetermined cost of manufacturing, labor, and material as estimated in accordance with standards set by the company.

Direct Materials

These are raw materials that can be directly attributed to the production process of a product, such as steel for a car or flour for a bakery.