Investors are often willing to pay positive prices for shares of firms that have never earned a profit because the investors
A) do not know the firms have never earned a profit.
B) expect the firms to have positive net earnings in the future.
C) expect that interest rates will rise in the future.
D) expect that higher rates of inflation will push stock prices higher in the future.

Question

Quizplus · Accepted Answer

Investors are willing to pay for shares of unprofitable firms because they anticipate future profitability and growth potential, which could lead to positive returns on their investment.

Investors Are Often Willing to Pay Positive Prices for Shares