A rising stock market index due to higher share prices
A) increases people's wealth and as a result may increase their willingness to spend.
B) increases the amount of funds that business firms can raise by selling newly issued stock.
C) decreases the amount of funds that business firms can raise by selling newly issued stock.
D) both A and B of the above.

Question

Quizplus · Accepted Answer

A rising stock market index due to higher share prices increases people's wealth and as a result may increase their willingness to spend. At the same time, it also increases the amount of funds that business firms can raise by selling newly issued stock. Therefore, both options A and B are correct.

A Rising Stock Market Index Due to Higher Share Prices