Cash flow and risk are the key determinants in share price. Increased risk, other things remaining the same, results in
A) a lower share price.
B) a higher share price.
C) an unchanged share price.
D) an undetermined share price.

Question

Quizplus · Accepted Answer

Increased risk generally makes investors less confident in a company's ability to generate consistent cash flow, leading them to demand a higher return on their investment. This results in a lower share price as investors sell their shares or demand a lower price for them on the market.

Cash Flow and Risk Are the Key Determinants in Share