The Figure Given Below Shows the Demand [D and D']

question 7

Multiple Choice

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-The price of the Amazon.com stock was very high in the 1990s although the company never earned an economic profit. This demonstrates that:

• A)investors' expectations of future profits alone influence the stock prices.
• B)the performance of a firm has no bearing on stock prices.
• C)stock markets are highly inefficient because investors vary in their risk appetites.
• D)speculation based on wishful thinking by investors have a bearing on the stock prices.
• E)investor expectations are generally rational.

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Definitions:

British Pounds

The British pound is the official currency of the United Kingdom, symbolized as GBP, and is one of the world's major currencies traded in foreign exchange markets.