You would expect the price of a share of stock to fall if
A) the expected dividend of the stock rose.
B) the economy went into recession.
C) the price level were rising.
D) all of the above

Question

Quizplus · Accepted Answer

A rise in expected dividends would increase demand for the stock, leading to an increase in the stock's price. A rising price level (inflation) would also increase the stock's price because its future earnings are worth less in real terms. However, a recession would cause the company's earnings and profits to decline, leading to a decrease in demand for its stock and a decrease in its price. Therefore, option B is the correct choice.

You Would Expect the Price of a Share of Stock