Asked by Meadow Smith on May 27, 2024
Verified
Generally, if people begin to expect a company to have higher future profits, the price of the company's stock will begin to decrease.
Future Profits
Expected earnings or gains from investments or business activities, projected into upcoming periods.
Stock Price
The cost of purchasing a share of a company's equity, representing ownership in the firm, and fluctuates based on supply and demand in the market.
- Understand the relationship between future profit expectations and stock prices.
Verified Answer
AD
Akhil DatlaJun 01, 2024
Final Answer :
False
Explanation :
When people expect a company to have higher future profits, investor optimism typically increases, leading to higher demand for the company's stock. This increased demand usually causes the stock price to rise, not decrease.
Learning Objectives
- Understand the relationship between future profit expectations and stock prices.