Stock prices reflect the expected future cash flow of the company.

Question

Quizplus · Accepted Answer

Stock prices are influenced by various factors, but ultimately they reflect the expectations of investors regarding the future cash flow of a company. If investors believe that a company's cash flow will increase in the future, they will be willing to pay a higher price for its stock, and vice versa. However, stock prices may not always fully reflect the true value of a company due to market inefficiencies and irrational investor behavior.

Stock Prices Reflect the Expected Future Cash Flow of the Company