Each of the following is a reason why stock market prices are a good indicator of the determinants of the baseline level of investment spending except
A) stock market prices include expected future growth as a determinant.
B) stock market prices include a risk premium as a determinant.
C) stock market prices include the short-term nominal interest rate on bonds as a determinant.
D) stock market prices include accounting earnings as a determinant.

Question

Quizplus · Accepted Answer

Stock market prices primarily reflect expectations about future profits, risk premiums, and accounting earnings, rather than the short-term nominal interest rate on bonds. The short-term nominal interest rate is more directly related to monetary policy and does not directly determine stock market prices.

Each of the Following Is a Reason Why Stock Market