Assuming that all else remains equal, when people become more optimistic about a company's future, which of the following is most likely to happen to the company's stock?
A)The supply of the stock and the price will both rise.
B)The supply of the stock and the price will both fall.
C)The demand for the stock and the price will both rise.
D)The demand for the stock and the price will both fall.

Question

Quizplus · Accepted Answer

When people become more optimistic about a company's future, the demand for the stock is likely to increase. This increased demand will drive up the price of the stock as investors are willing to pay more for it. The supply of the stock is not likely to be affected by optimism, so option A and B are incorrect. Option D is also incorrect because if the demand and price were to fall, it would mean that people are becoming less optimistic about the company's future.

Assuming That All Else Remains Equal, When People Become More