If the expected future earnings of a company goes up, you would expect the price of its stock to
A) rise.
B) fall.
C) be unaffected.
D) fall to zero.

Question

Quizplus · Accepted Answer

If a company's expected future earnings increase, it is a positive signal to investors that the company is performing well and has potential for growth. This would likely result in increased demand for the company's stock, driving the price up. Therefore, you would expect the price of the stock to rise.

If the Expected Future Earnings of a Company Goes Up