What happens when the actual profit reported exceed the expected profit for a company?
A) It causes an increase in the share price.
B) It causes a decrease in the share price.
C) It is impossible to understand the changes in market price of share.
D) There is no share price reaction because forecasts of profit almost never reflect actual results.

Question

Quizplus · Accepted Answer

When the actual profit reported exceed the expected profit for a company, it signals to investors that the company is performing better than anticipated, which can cause an increase in demand for the company's shares and thus an increase in the share price. This is because investors often make investment decisions based on the company's expected profit and if the actual profit exceeds expectations, it indicates that the company is doing well and is expected to continue performing well in the future.

What Happens When the Actual Profit Reported Exceed the Expected