Over the past five years,the highest share price for Techno Inc. ,a 15-year-old software company,was around $750,and its lowest price was around $250,while for ConsumerCo,a consumer products firm with a 50-year history,share prices ranged from $85 down to $60 over the same period.Which of the following are the most likely reasons for these stock market reactions?
I.The stock market is reflecting emotions more than fundamentals.
II.Swings in prices reflect changes in expectations of Techno Inc.
III.The range in expectations for Techno Inc.is likely greater than for ConsumerCo.

Question

Quizplus · Accepted Answer

Swings in prices reflect changes in expectations of Techno Inc. as technology companies are often more volatile in the market than consumer product firms. It is also likely that the range in expectations for Techno Inc. is greater than for ConsumerCo, as technology companies are generally more innovative and driven by rapid changes in the industry. While emotions may play a role in stock market reactions, it is less likely to be the sole reason for the significant price swings experienced by Techno Inc. and ConsumerCo.

Over the Past Five Years,the Highest Share Price for Techno