Which of the following tend to increase security market prices?
I.An increase in industrial production
II.An increase in corporate profits
III.An increase in the federal deficit when the economy is strong
IV.An increase in interest rates

Question

Quizplus · Accepted Answer

An increase in industrial production and corporate profits tend to increase the demand for securities and, as a result, increase their prices. Conversely, an increase in interest rates tends to decrease demand for securities, which brings a decrease in prices. An increase in the federal deficit when the economy is strong suggests that the government may implement policies that could dampen economic growth, and therefore, suppresses stock prices.

Which of the Following Tend to Increase Security Market Prices