In addition to a company's earnings prospects and shareholder perceptions of equity risk affecting stock prices, recent research suggests that ______ also influence(s) stock prices.

Question

Quizplus · Accepted Answer

Inflation and market interest rates directly influence stock prices by affecting the cost of capital and the attractiveness of alternative investments. Portfolio diversification, while important for risk management, does not directly influence stock prices.

In Addition to a Company's Earnings Prospects and Shareholder Perceptions