Other things being constant, when a business issues more stock, what happens?
A) The supply of the stock is greater and thus the price will fall.
B) The supply of the stock is less and thus the price will rise.
C) The demand for the stock is greater and thus the price will rise.
D) The demand for the stock is less and thus the price will fall.

Question

Quizplus · Accepted Answer

When a business issues more stock, the supply of the stock increases without any increase in demand, thus creating an oversupply. This oversupply causes the price to fall. Therefore, the best choice is A.

Other Things Being Constant, When a Business Issues More Stock