If More People Think a Corporation's Stock Is Overvalued Than

question 5

Multiple Choice

If more people think a corporation's stock is overvalued than think it is undervalued then there is a

• A)surplus,so its price will rise.
• B)surplus,so its price will fall.
• C)shortage,so its price will rise.
• D)shortage,so its price will fall.

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Definitions:

Federal Reserve

The principal banking authority in the United States, responsible for overseeing the nation's financial and monetary systems.

Reserve Requirement

The reserve requirement is a central banking regulation that sets the minimum amount of reserves that must be held by a commercial bank, not to be loaned out, to ensure bank liquidity and stability.

Open Market Sale

The sale of government bonds by the central bank to reduce the money supply in the economy.

Money Supply

The complete sum of available financial resources in an economy, including cash, coins, and the funds available in checking and savings accounts, at a particular instant.