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

Question

Quizplus · Accepted Answer

The expected future earnings of a company are one of the main factors that influence the price of its stock. If these earnings go down, investors are likely to view the company as less valuable and demand for the stock will decrease. This decrease in demand will cause the stock price to fall.

If the Expected Future Earnings of a Company Goes Down