If the Expected Future Earnings of a Company Goes Up

question 158

Multiple Choice

If the expected future earnings of a company goes up, you would expect the price of its stock to

• A) rise.
• B) fall.
• C) be unaffected.
• D) fall to zero.

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Definitions:

Budget Constraint

A financial limitation that defines the combination of goods and services an individual can afford to purchase given their income and the prices of those goods and services.

Income

The financial gain acquired by an individual or a company, which is typically calculated on an annual basis and obtained through work, investments, or business operations.

Nuts

Plant-derived kernels rich in fats, protein, and other nutrients, typically consumed raw or roasted.

Berries

Small, juicy fruits that are typically round, brightly colored, and sweet or sour in taste.