Your dad said that he was curious to know why there is so much fluctuation in the value of common stocks.In 1997 the prospects for Sun Industries became more uncertain and investors began to view it as a more risky investment than they had previously.To compensate for this added risk,investors increased their required rate of return on Sun Industries stock,resulting in a decline in its market value.This explains the factor of

Question

Quizplus · Accepted Answer

The fluctuation in value of common stocks can be attributed to many factors, but in this particular scenario, the decline in market value of Sun Industries is explained by the increased perceived risk associated with the company, resulting in investors demanding a higher rate of return to compensate for the added risk. This highlights the relationship between risk and stock valuation.

Your Dad Said That He Was Curious to Know Why