Consider the market for ABC Company's stock. What shouldhappen to the stock for this company if there is a rumor thatthe company is set to merge with another very profitablecompany?
A)The demand for the stock would shift to the left.
B)The demand for the stock would shift to the right.(True Answer )Correct
C)The supply of the stock would shift to the left.
D)The supply of the stock would shift to the right.

Question

Quizplus · Accepted Answer

If there is a rumour that the company is set to merge with another very profitable company, it is likely to increase investors' confidence in the company's future profitability. This would lead to an increase in demand for the company's stock, shifting the demand curve to the right. As a result, the price of the stock would increase.

Consider the Market for ABC Company's Stock