Stocks tend to move together if they are affected by:
A)company-specific events.
B)common economic events.
C)events unrelated to the economy.
D)idiosyncratic shocks.
E)unforeseen events.

Question

Quizplus · Accepted Answer

When stocks are influenced by common economic events such as interest rate changes, inflation, or recession, they tend to move together in the same direction. This is because these events affect the entire market, rather than just individual companies. Company-specific events (A) and idiosyncratic shocks (D) impact individual stocks and do not necessarily affect the market as a whole. Events unrelated to the economy (C) and unforeseen events (E) may also impact individual stocks differently, leading to a lack of correlation between them.

Stocks Tend to Move Together If They Are Affected By