One of the reasons that investment spending tends to be related to the movement of stock market prices is that
A) when expected profits are high, investors tend to purchase bonds rather than stocks, thus depressing stock prices.
B) when expected profits are high, businesses managers tend not undertake investment projects.
C) when expected profits are high, investors tend to purchase stocks rather than bonds, thus bidding up bond prices.
D) when expected profits are high, investors tend to purchase stocks rather than bonds, thus bidding up stock prices.

Question

Quizplus · Accepted Answer

When expected profits are high, investors are more likely to buy stocks in anticipation of higher returns, which increases demand for stocks and thus drives up their prices.

One of the Reasons That Investment Spending Tends to Be