A. According to Michael Porter, the theory of entry describes how new competitors exert pressure on pricing and earnings.
On May 23, 1947, Michael Eugene Porter, an American academic known for his theories on economics, business strategy, and social factors, was born. He is one of the founders of both the consulting company The Monitor Group and the social impact consultancy FSG. He is also the Bishop William Lawrence Professor at a university at Harvard Business School.
Porter's theory states that profit comes from power. The size of a company's moat, market share, or both of these variables taken together boosts its capacity to extract profits from competitors, suppliers, and customers.
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mr. garcia is planning for retirement. he deposits $650 each month into a retirement account. the account pays 9% per year compounded monthly. how much will he have in 17 years when he retires?
Since Mr. Garcia is planning for retirement and calculate his amount after 15 years of investment means he look for Future Value of an Annuity.
What are the present and future values?
The amount of money that has to be invested in order to accomplish a particular future goal is known as the present value. Future value is the dollar amount that, if invested, will grow over time. The amount you must invest in order to obtain the future worth is known as the present value.
An illustration of future value
The future value formula, FV=PV(1+i)n, increases the present value PV by a factor of 1 + I for each period into the future. The future value calculator calculates the FV using a number of variables, including: The whole present value. a large number of times, usually years. rate of interest.
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the beta coefficient of zed corporation is equal to 0.7 and the required rate of return on the stock equals 12 percent. if the expected return on the market is 12.5 percent, what is the risk-free rate of return?
Zed Corporation's beta coefficient is 0.7, and the required rate of return on the stock is 12%. If the expected market return is 12.5%, the risk-free rate of return is 10.83%.
Stock in finance refers to the shares of ownership in a corporation or company. A single share of stock represents fractional ownership of the firm in proportion to the total number of shares. This often entitles the shareholder to a percentage of the company's earnings, cash from asset sale, or voting power, sometimes divided in proportion to the amount of money each stockholder has invested. Stocks are deposited with depositories in electronic form, commonly known as a Demat account. When a firm issues additional shares, current shareholders' ownership and rights are eroded in exchange for cash to continue or grow the business.
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What causes the total amount of interest paid on a mortgage to be so much higher than on other types of debts?.
Credit Score causes the total amount of interest paid on a mortgage to be much higher than other types of debts. Your credit score is one issue that may affect your charge per unit.
In general, shoppers with higher credit scores receive lower interest rates than shoppers with lower credit scores. Lenders use your credit scores to predict how reliable you will be in paying your loan.
Mortgage rates area units tied to the fundamental rules of provide and demand—factors like inflation and economic process. A mortgage is that the transfer of an associate interest in specific unmovable property for the aim of securing the payment of a cash advance. Investors, even those with prime credit ratings, were far more seemingly to default than non-investors once costs fell.
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when the local currency of a foreign subsidiary is the functional currency, the foreign subsidiary's inventory carried at cost would be converted to u.s. dollars by:
The foreign subsidiary's cost-based inventory would be converted to U.S. dollars by translation through the current exchange rate.
How is a foreign subsidiary accounted for?The currency that affects sales prices is the subsidiary's functional currency. The subsidiary's functional currency is that of the nation whose laws and level of competition affect sales pricing.
Because it is the local currency, the corporation decides to utilize euros as the functional currency. In a different scenario, a Mexican business with the majority of its operations in the US would utilize the US dollar as its functional currency, even while its financial statements are expressed in terms of Mexican pesos. If your company uses US GAAP for its financial reporting and has control over a foreign subsidiary, the foreign subsidiary must be included in the financial reporting of the US parent.
The financial statements must be translated to U.S. dollars if the overseas subsidiary does not keep records in that currency.
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the advantages of npv are all of the following except group of answer choices it recognizes the timing of the benefits resulting from the project it allows the comparison of benefits and costs in a logical manner through the use of time value of money principles it provides the amount by which positive npv projects will increase the value of the firm it can be used as a rough screening device to eliminate those projects whose returns do not materialize until later years
The advantages of NPV are all of the following except it can be used as a rough screening device to eliminate those projects whose returns do not materialize until later years.
NPV allows the comparison of benefits and costs in a logical manner through the use of time value of money principles, it provides the amount by which positive NPV projects will increase the value of the firm, and it recognizes the timing of the benefits resulting from the project. NPV stands for Net Present Value is a term used in finance whose main objective is to capture the total value invested in any project.
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the price elasticity of supply measures how responsive group of answer choices equilibrium price is to equilibrium quantity. sellers are to a change in buyers' income. sellers are to a change in price. consumers are to the number of substitutes.
Elasticity of supply measures how responsive: sellers are to a change in price.
Definition of Supply Elasticity and its LawElasticity of supply is a term in microeconomics that interprets the influence of large or small perceptions of changes in the quantity of goods offered due to price changes.
Based on economic theory, in the law of supply and demand, the supply of an item or service will increase if the price increases. And vice versa, the supply of an item or service decreases when the price drops.
Thus, in order to measure such a change, we need the concept of elasticity of supply that can measure the level of quantity supplied in response to a change in price.
Types of Elasticity of SupplyTypes of Elasticity of Supply- Perfectly Inelastic Supply
A good or service has a perfectly inelastic supply if the quantity supplied at any price. The elasticity of supply as such is zero, meaning that there is no elasticity.
For example, this type of elasticity is the supply of exclusive items such as the Mona Lisa painting. Whatever the price offered, the demand for the supply of these goods will not increase.
- Relatively Less-Elastic Supply
When the change in supply is relatively small compared to the change in price, we can say that the product has a relatively less elastic supply. In this case, the price elasticity of supply is assumed to be less than 1.
- Relatively Greater-Elastic Supply
If the change in supply is relatively more than the change in price, we assume that the product has a relatively more elastic supply. This means that the price elasticity of supply is greater than 1.
- Unitary Elastic
For a product with a unit elasticity of supply, the change in the quantity supplied of a product is exactly the same as the change in its price. In other words, changes in price and supply of goods or services are proportional to each other. That means, the value of the price elasticity of supply in such a case is equal to 1.
- Perfectly Elastic Supply
A good or service with perfectly elastic supply has infinite elasticity. In such a case, the supply becomes zero.
This type of elastic supply reflects the fact that suppliers of such a commodity are willing to supply some of the product at a higher price. In a perfectly elastic supply curve, the straight line is parallel to the quantity or quantity of the product.
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what happens to the price of a bond with a 5% coupon rate if interest rates for similar bonds go up to 8%?
The price of bonds will decrease when the interest rates go up to 8%.
Bond prices and interest rates have an inverse relationship with each other. When the interest rate increase the price of bonds decrease and when the interest rate decreases the price of bond increase.
The coupon rate is decided by the purchaser and the interest rate is decided by the lender. When the coupon rate is higher than the interest rate the price of bonds will rise and when the coupon rate is lesser than the interest rate the bond prices will fall.
As the coupon rate is lesser than the interest rate so the price of bonds will fall.
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g because an audit in accordance with generally accepted auditing standards is influenced by the possibility of material errors, the auditor should conduct the audit with an attitude of group of answer choices professional responsiveness. conservative advocacy. objective judgment. professional skepticism.
The correct option would be Professional Skepticism in case of audit accordance.
What exactly is a professional sceptic?
Having a sceptical mindset is what it means to be professional sceptic. being watchful for anything that could point to an inaccuracy or fraud-related misrepresentation. Analyzing audit evidence critically Professional scepticism involves being on the lookout for things like audit evidence that conflicts with previously acquired audit evidence. Information that casts doubt on the veracity of records and answers to questions that will be used as audit proof. Conditions that could point to potential fraud. It is a crucial mindset that improves the auditor's capacity to recognise and react to circumstances that could point to a potential misstatement. A critical evaluation of audit evidence is part of it.
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what would be your first response if you were asked your personal thoughts on strategic management as a tool
Strategic managements provides overall direction by developing overall direction by developing plans and policies designed to achieve objectives and then allocating resources to implement the plans.
What do we learn in strategic management?
In strategic management we can manage business and projects proactively with a focus on long term strategy, rather than reacting. It helps you to ensure that on the latest business growth strategies as well as on the newest tools for strategic planning models.
It helps has a specific goals that day to day basis, weekly, monthly and sometimes yearly. The organization helps in setting of competitive environment and coming up with strategies to help you achieve organization goals.
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which sections of the uniform commercial code (ucc) address the effect of destroyed goods on contract performance?
Section 28:1-103 of the uniform commercial code (ucc) addresses the effect of destroyed goods on contract performance.
All business transactions in the United States are governed by the Uniform Commercial Code (UCC), a comprehensive body of legislation. It is a uniformly enacted state law rather than a federal one. For interstate business transactions, uniformity of law is crucial in this field.
Businesses can enter into contracts knowing that the terms will be upheld consistently by courts in every American jurisdiction thanks to the UCC's widespread adoption. Because commercial connections are more secure as a result, businesses may expand and the American economy does well. The UCC has been referred to as "the backbone of American commerce" for this reason.
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(a) assume that demand for money is constant and inelastic (does not dependon nominal interest rates). what should be the growth rate of the money supply to keep inflation at 0%?
10% should be the growth rate of the money supply to keep inflation at 0%.
According to the Quantity Theory of Money: M x V = P x Y.
% change increase + % increase in velocity = % increase in price + % increase in output
x + 0 = 0% + 10% (since velocity is constant)
Thus, growth in money supply = 10%.
The amount of money in circulation at any given time is referred to as the money supply. Although there are various ways to define "money," demand deposits and circulation-level money are frequently used as conventional metrics.
According to the quantity theory of money, the currency is neutral. This does not imply that variations in the money supply are without consequence. Inflation is a possibility when the Federal Reserve expands the money supply.
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you put money into an account and earn a real interest rate of 6 percent. inflation is 3 percent, and your marginal tax rate is 20 percent. what is your after-tax real rate of interest? group of answer choices
the after-tax real rate of interest is calculated by the fisher effect and is found to be 4.2%
The Fisher effect describes the relationship between the real and nominal interest rates and the expected rate of inflation. It also explains money's neutrality. As such, it is crucial in economics.
Fisher effect :
Real interest rate = nominal interest rate - inflation rate
6 = nominal interest rate - 3
Nominal interest rate = 9
Given that the marginal tax is 20%, the nominal interest rate realized will be:
9 - 20*9 / 100 = 7.2
Now, the real rate of interest =
7.2 - 3 = 4.2
The Fisher Effect, named after economist Irving Fisher, describes the relationship between inflation and both real and nominal interest rates.
According to the Fisher Effect, the real interest rate equals the nominal interest rate minus the expected inflation rate.
The Fisher Effect has been applied to the study of the money supply and global currency trading.
When the real interest rate is positive, it indicates that the lender or investor can outperform inflation.
When the real interest rate is negative, it means that the interest rate charged on a loan or paid on a savings account is not higher than the inflation rate.
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at the beginning of the lease period, a lease is reported in the lessee's (user's) balance sheet for which amount?
at the beginning of the lease period, a lease is reported in the lessee's (user's) balance sheet for Fair worth of the fundamental resource.
Present worth of anticipated cash inflows from utilizing the fundamental resource. Leases are not announced yet to be determined sheet.
How are working leases detailed in the resident's fiscal reports?
On account of a working lease, the tenant will record a rent cost on its pay proclamation during the period it utilizes the resource. No resource or risk will be recorded on the accounting report.
How would you represent a rent on a monetary record?
A rent will be recorded on the accounting report as a right-of-purpose (ROU) resource and rent risk. The rent responsibility is the instalment commitment over the term of the rent contract, while the ROU resource addresses the control of the resource under the rent contract.
When a rent qualifies as a money rent what sum is recorded as the expense of the right-of-purpose resource?
The right-of-purpose resource is a tenants on the whole correct to utilize a resource over the existence of a rent. The resource is determined as the underlying measure of the rent risk, in addition to any rent instalments made to the lessor before the rent beginning date, in addition to any underlying direct costs brought about, short any rent motivating forces got.
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an s corporation form of ownership overcomes which disadvantage of the regular or c corporation form of ownership?
The disadvantages of the regular or c corporation form of ownership is the double taxation issue.
The practice of collecting taxes from two or more jurisdictions on the same amount of money (in the case of income taxes), property (in the case of capital taxes), or business transaction is known as double taxation.
There are many approaches to reduce double liability. For instance, a jurisdiction might:
exempt foreign-source income from taxation, exempt foreign-source income from taxation if tax had already been paid on it in another jurisdiction, or if it exceeds a certain threshold to exclude tax haven jurisdictions. Alternatively, you can fully tax the foreign-source income but give yourself a credit for taxes already paid on it in the foreign jurisdiction.
Tax treaties, which specify guidelines to prevent double taxation, are agreements that jurisdictions can make with other nations.
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item 5 a bond that pays interest annually yields a rate of return of 9.50 percent. the inflation rate for the same period is 3 percent. what is the real rate of return on this bond?
A bond that pays interest annually yields a rate of return of 9.50 percent. the inflation rate for the same period is 3 percent. The real rate of return on this bond is 6.31%
It is calculated as:
1+0.095=(1+r)*(1+0.03)
1.095=(1+r)*(1.03)
1.095/1.03= 1+r
1.063-1 = r
0.063= r
6.31% = r
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if mcdonald's and burger king raise prices too high, customers may switch from burgers to tacos. this illustrates porter's force of .
If McDonald's and burger king raise prices too high, customers may switch from burgers to tacos. this illustrates porter's force of Substitutes.
Porter's force:
Porter's forces or Porter's five force is method of analyzing the operating environment of a competition of a business. And it helps to derive five forces that determine the competitive intensity and, therefore, the attractiveness of an industry in terms of its profitability.
Given,
if McDonald's and burger king raise prices too high, customers may switch from burgers to tacos.
Here we need to find the porter's forces used.
While we looking into the given situation we have identified that the customers are switched over from burgers to tacos because the increase in the price of the product.
Therefore, it defies the porter's force of substitutes.
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which citation in the professional standards outlines the auditor's responsibility regarding obtaining a written representation letter from management under these circumstances?
PCAOB AS 2201 Par. 87 citation in the professional standards outlines the auditor's responsibility regarding obtaining a written representation letter from management.
This standard establishes requirements and provides guidance for auditors who are hired to perform an audit of management's assessment1 of the effectiveness of internal control over financial reporting ("the audit of internal control over financial reporting") in conjunction with an audit of the financial statements.
Internal control over financial reporting that is effective offers reasonable certainty about the dependability of financial reporting and the compilation of financial statements for external purposes. If the firm has one or more major vulnerabilities, its internal control over financial reporting cannot be regarded effective.
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why do you think that air carriers are so mutually dependent? how have pricing practices changed since the prederegulation days? what was the major form of competition in the prederegulation era? discuss some of the causes of the price wars in the 1980s. do you foresee prices stabilizing in the next several years? why is there a tendency in oligopolistic industries toward price rigidity and nonprice competition?
Mutually dependent in pricing has created an atmosphere of predatory pricing and price competition that has dramatically reduced net profits.
Airline competition is interdependent in terms of services, pricing, routes, etc. - Pricing interdependence has led to a predatory pricing and price-competitive environment, resulting in a dramatic drop in net income. - Today, over 90% of passengers pay on average only about 30% of the full fare.
All airlines on the market plan departure time schedules and offer different fares. The basics of competition between airlines are: Customers choose by price and time, and those who see both airlines as equal choose by a secondary character called quality.
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of the eight core it processes that must be managed for an effective it department, which competency involves development of it staff skills and retention of it talent?
Of the eight core it processes that must be managed for an effective it department, Human capital management competency involves development of it staff skills and retention of it talent.
Social scientists refer to personal qualities that are seen to be helpful in the manufacturing process as "human capital." Employee education, health, and knowledge are all included in it. Individual profits are significantly influenced by human capital. Knowledge, skills, and physical and mental health make up human capital.
Steel, cement, electricity, fertilisers, refinery products, natural gas, crude oil, and coal. The eight core industries make up 40.27 percent of the total weight of the goods covered in the industrial production index. Annexes I and II, respectively, contain details on annual and monthly indices and growth rates.
The Ministry of Commerce and Industry's Department of Industrial Policy and Promotion, Office of the Economic Adviser, is in charge of compiling and distributing the index. The following information is contained in the Index of Eight Core Industries UPSC curriculum.
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If the government levies a $5 tax per ticket on buyers of nfl game tickets, then the price paid by buyers of nfl game tickets would?.
If the government levies a $5 tax per ticket on buyers of nfl game tickets, then the price paid by buyers of NFL game tickets would increase by less than $5.
A $5 tax imposed by the government results in a 1% increase for sellers and a 1% increase for purchasers in pricing. As a result, the price that consumers pay won't go up by the whole $5.
Revenues from taxes on income and profits, social security contributions, taxes on goods and services, payroll taxes, levies on the ownership and transfer of property, and other taxes are all considered to be taxes.
The amount of output that is taxed by the government is represented by total tax revenue as a proportion of GDP. It can be used as a gauge for the extent of governmental resource management in the economy. The total amount of tax revenue collected expressed as a percentage of GDP is used to calculate the tax burden.
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an organization learns from a social media site that less than 10 percent of users who visit their page engage with the video that is pinned to the top. this is an example of what type of information?
A company discovers through a social media platform that fewer than 10% of visitors to its page interact with the top-pinned video. This is an illustration of information that comes from customer interaction.
Customer contact is the exchange of information between a company and a client. This includes clients calling you for assistance or contacting you via social media with inquiries.
Every time you connect with a customer, you have the ability to influence how they feel about your company. Based on each encounter, customers modify their behavior. For your business, these adjustments might be beneficial or unprofitable. When you use good customer interaction techniques, your firm may flourish.
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a physical count of supplies on hand at the end of may for masters, inc. indicated $1,255 of supplies on hand. the general ledger balance before any adjustment is $2,150. what is the adjusting entry for supplies that should be recorded on may 31?
The adjusting entry for supplies that should be recorded on may 31 is $895.
Evaluating adjusting entry :The general ledger balance of inventories before any adaptation = $ 2,150
Physical count of inventories on hand at the end of May 31
= $ 1,255.
Value of inventories set up short = $2,150 -$ 1,255
= $ 895
The adaptation needed to identify the difference as charges and the stock of inventories to be reduced to $1255 in the books.
There's an increase in charges.
So inventories Charges of $ 895 is to be debited
On the other hand there's a drop in inventories( current asset). So inventories will be credited.
So, the conforming entry for office inventories that should be recorded is disbenefit inventories Expense$ 895 and credit inventories$ 895
Adjusting Entry :
An adjusting entry is an entry made to assign the right quantum of profit and charges to each account period. It updates preliminarily recorded journal entries so that the fiscal statements at the end of the time are accurate and over- to- date. Adjusting entries are changes to journal entries you've formerly recorded. particularly, they make sure that the figures you have marked match up to the correct account ages
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4. (1pts) the next dividend payment by wyatt, inc. will be $1 per share. the dividends are anticipated to maintain a growth rate of 10% forever. if the stock currently sells for $40 per share, what is the required return?
Wyatt, Inc.'s upcoming dividend payment will be $1 per share. It is expected that the dividend growth rate would always be 10%. If the company is now trading at $40 per share, the needed return is 12.5%.
How does rate of return work?The investment strategy of the businesses, groups, and people is to generate profits greater than the initial investment. The capital asset pricing model can be used to determine the expected rate of return for an investment in a stock that regularly declares dividends.
The data needed to determine the necessary rate of return is
The dividend that will be paid is $1.
The rate of dividend growth is 10%.
Currently, the share price of the stock is $40.
Today's necessary return will be determined using the dividend growth model formula.
R= (D1 / P) + G
Where
P = present-day stock price
D1 = future dividend payment
R= necessary a rate of return
G= pace of dividend growth
In the formula, changing the numbers
R = (1 / 40) + 0.1
=0.025 + 0.1
=0.125 or 12.5%
The required return is 12.5%
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accidentally hit a utility pole. the cost to repair her car was $2,950, and she has a $500 collision deductible. how much will the insurance company be required to pay for the car repair?
The insurance provider will be obligated to cover the $2,450 cost of the car repair.
Which kind of insurance will cover the cost of your car's repair?In the event of an accident, your auto insurance policy may provide coverage for vehicle damage. However, you are responsible for covering the cost of routine maintenance. That's where mechanical breakdown insurance, commonly referred to as auto repair insurance, comes in.
What transpires if the repair costs exceed the deductible?It represents the sum of money you'll have to spend out-of-pocket for repairs to your car if you have an accident or have your car stolen. Your insurance provider will cover the remaining costs if the cost of the vehicle's repair or replacement exceeds the deductible.
In the given question,
The cost to repair her car= $2,950
Collision deductible= $500
Insurance company be required to pay= $2,950 - $500 = $2,450
The cost of the car repair will cost the insurance company $2,450.
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in job order costing, the amount of time spent by an employee on an individual job is recorded on a(n) a.time ticket b.employees' earnings record c.pay stub d.in-and-out card
The correct answer (a)Time ticket . A time ticket shows when a student is eligible to register for the next term. All students need a time ticket while time ticketing is enabled; when time ticketing is disabled, a student can register whenever they want as long as the term is open for registration.
What Does Time Ticket Mean?
The bookkeeper or payroll accountant collects the time tickets once the pay period is over, checks them for mistakes or fraudulent entries, and inputs the information into the payroll and accounting system. The payroll records then contain the time cards.
These physical cards serve as both an internal control and a record of the hours that employees have worked. Because time tickets will only be accepted if they are marked with the official time clock stamp, employees are unable to fabricate the number of hours they worked or modify work records. Time tickets serve as an additional internal control because they call for a second employee to enter the employee's working hours.
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a company that manufactures athletic shoes been asked to provide shoes to a local football team. in return, the football team will put the company's name on their jerseys. what is the name for this category of promotional tool?
A company that manufactures athletic shoes been asked to provide shoes to a local football team. Sports marketing is the name for this category of promotional tool.
What's marketing blend in sports marketing?
The marketing blend is pivotal because it defines the sport business, and much of the sport marketer's time is spent on colorful functions within the marketing blend. The marketing blend is the strategic combination of the product, price, place and creation rudiments.
Promotional tool:Promotional tools are strategies, styles or coffers that impel consumers to buy a product or service. numerous marketing and advertising professionals use them to raise mindfulness of a new product or increase deals of a particular item or service.
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assume the following scenario: the price of the product is $20/unit. the marginal cost is also $20. the average variable cost is $25, while the average total cost is $27. what would you recommend this perfectly competitive firm to do? question 7 options:
A firm's average variable cost (AVC) in economics is calculated by dividing its variable costs by the volume of output it produces.
What is average variable cost:
The entire variable cost per unit of production is known as the average variable cost (AVC). Total output is subtracted to get the total variable cost. Total variable cost (TVC) refers to all expenses, including labor and supplies, that change depending on output. The simplest method to tell if a cost is variable is to look at if it varies as the output does.
The AVC will be used by businesses that aim to maximize profits to decide whether to halt short-term manufacturing. Given the production they are creating, if the price they receive for the good exceeds the AVC, they are at least paying all variable costs and some fixed costs. Fixed costs are expenses incurred that are fixed at a specific price regardless of how much is produced; they do not change with production. The rent on the building where the commodity or service is produced or rendered is the finest illustration. The rent will always be the same, regardless of how many units you generate or clients you service.
You would be better off continuing production as long as the price is higher than the AVC and covers some of the fixed costs. The company might opt to halt production in the short term if the price falls below the AVC because it no longer covers any fixed expenses or all variable costs. Therefore, the company would like to only pay the fixed costs rather than incur any variable expenditures.
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Deborah has just gotten a request from a candle vendor. She is looking for a place to sell her newest holiday candles. What type of event might Deborah suggest the vendor take part in?
Question 1 options:
theater style meeting
forum
exposition
boardroom style meeting
Forum Events, an open forum for discussion in the public. For those who are interested in local history, the club offers a forum: a venue for open discourse or the presentation of views.
What is Holiday Season?The time from Thanksgiving to New Year's is usually referred to as the holiday season. In America, the conclusion of Thanksgiving day (informally) ushers in the holiday season. We are rapidly nearing Christmas, Kwanzaa, Hanukkah, and the new year. Building a solid connection between family and our community via holiday customs is crucial. They provide us a sense of belonging and a channel through which we can express our values. They support our family gatherings and strengthen our ties to the past.
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short-run equilibrium. the economy is in short-run equilibrium. to move the economy to potential output, the government should reduce its spending by an amount equal to
When the total amount of output demanded and output supplied are equal, the economy is in short-run equilibrium.
How does the economy transition from a short-term to a long-term equilibrium?When the total amount of output and the total amount of demand are equal, we are in short-run equilibrium. When prices adjust to changes in the market and the economy functions to its full potential, we call this long-run equilibrium.
How much will the short-term equilibrium output be?When the level of aggregate output demanded and the level of aggregate output supplied are equal, an economy is said to be in short-run equilibrium. The short-run equilibrium output in the AD-AS model can be found at the intersection of the Short-Run Aggregate Supply (SRAS) and the Aggregate Demand (AD).
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assume that markets are semi-strong form efficient. suppose that during a trading day important new information is released by a firm indicating that one of the firm's oil fields, previously thought to be very promising, just came up dry. how would you expect the price of a share of stock to react to this information?
The company's shareholders begin selling their shares as soon as the new information is deemed unfavorable.
c. The value of a share will fall below what is considered appropriate due to decreased demand for the shares, but the price will eventually rise to the appropriate level among the available options.
What takes place when the value of shares drops?The value of the company simply decreases when the price of a share falls. This value change is not redistributed among any parties. The forces of supply and demand determine the direction of the stock market.
When the price of a share drops, what does that imply?If more individuals have any desire to purchase a stock (request) than sell it (supply), then, at that point, the cost climbs. On the other hand, the price would fall if more people wanted to sell a stock than buy it because there would be more supply than demand.
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