Which one of the following statements is correct?
A)Stock prices are independent of the economic cycle.
B)Stock prices change simultaneously with the economy.
C)Stock prices are often start to rise before the end of a recession.
D)Changes in stock prices generally lag changes in the economy.

Question

Quizplus · Accepted Answer

Stock prices often start to rise before the end of a recession. This is because investors anticipate an economic recovery and increase their demand for stocks. Therefore, stock prices can be leading indicators of an economic recovery.

Which One of the Following Statements Is Correct