When Stock Prices Fall

question 41

Multiple Choice

When stock prices fall

• A)an individual's wealth is not affected nor is their willingness to spend.
• B)a business firm will be more likely to sell stock to finance investment spending.
• C)an individual's wealth may decrease but their willingness to spend is not affected.
• D)an individual's wealth may decrease and their willingness to spend may decrease.

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Definitions:

Higher Risk

A condition or scenario involving a greater probability of loss or less certainty of returns, typically demanding a higher risk premium.

Interest Earned

The income received from investment assets before taxes and expenses have been deducted.

Investment

The allocation of money into financial assets, property, or other ventures in the expectation of obtaining an income or profit.

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage.