Question

Factors that result in higher or lower stock prices? What drives stock prices? 700 word minimum

Answer 1

26 tactors that can cause a rise or fell in the Stock pries , Many factors to the inero contributes ps decread in the stock puces ranging from a specific news about a o company's earnings to investor's behavious towards the stock market in general. hat us vuit the various factors that could affect the stock prices: company news and performance: - There are various company Specific factors that could affat the stock prlies They are listed as follows: - neios elease about company's earnings and profits and the estimated for the future. - Donderd announcement by the company -) New product launch for a recall of the product - Acquiring a new large contract - arge contract Imployed lagrofle

11 12 25 26 27 28 29 30 (239-261 WK14 posed boomanae 201207 2 7 proposed takeover a takeover or meeger change in management s accounting scams or frards. Industry Pe stocle Riced the company Xompanies within the same indostry Apelly tolove in the same direction offen. This ! is because Industry performance Sometimes the stock Prices of the companies within the sameindustry will more in the same direction. This in. because the stock prices are affected by the market conditions of the . Companies in the same industry in are the same manner. There also a Situations where the stock price of a en benefit from a snippet company od I news oh oh for its competitor if the companies compete for the same market Sunday 28 If sindslivsed, please return to

28 29 30 31 241-124 ] WK 35 may cause also cause the general 29 : 122-1243 WK. >> Investor sentiment - An investor sentiment es confidence may cause the masket to go up or clows - while ich may also cause the stock gol up or pries to clown. The general direction that the stock masket follon may affect the value of a stock. Bull market. This is a strong in Stock market Condition where by the stockr Poices keeps schine d and also the investor confidence also goes up. This Could märke a situation wheele there a economic recovery of boom and the level of innestor optimism, Bear market: This is weak market. condition whereby the Hock pries, tend to fall and also the innestor confidence. fades. This leads to a situation where that there & economie clown fall or on recession and the level of nemployment would be high with the rising price,

25 26 2 10 Economic factors that are various the stoubor the clore The various economic factors That are sesponible for the for the ballar in sise of the stock prices. 7. Interest rates. - The Banks a nd may increase or decrease the interest rates o stimulate in order cor stabilise the economie condtion. This condition is known as the monetary policy. If a company horrows to I capand os improve its business situation higher interest rates may affect the cost of its clebt. This may o Seduce the profits of the company and the dividends paid to to shareholders. This may result in the clrop of the share pries, funds to y 2. Economic outlookr! Ir the economy appeals to be expanding, this may lead to an increase in the stock printre prices. Investors may luy more stocks thinking that they will be able to reap future protes and to a rise in the stocks prices. If undelivered, please return to:

there Purch purchas It the econo cwblok U unnectos tends to reduce os sale of the stocks. on refers this ter the profite - Inflation refers to an increa in the consumer prices. This tends to seduce the sales and there by the Prok also decreases. Higher prices means higher interest rates. The Banks may increase the interest rates to slow d down inflation i 4. Deflation - Falling prices means lower profit for the companies and a clecrease in the level of economic activity for the - Lampany. When the stock prices Stacts I falling investors may start selling their shares and they will concentrate on fined income investments such as the bonds. Interest rales may be reduced to encourage people to borrow more money

5. Economic and political shocke changes around the world may Theat the economy as well to as apr stock prices food enample, in the cent condition, the deadly corona Prous and its spread hats greatly theated the global economy and d to there is a clowntorn of the economic activity Globally and of the stock poces. Similarly an increase in the energy costs may lead to a lowes saber sales, dlower e stock also stimulated a pronally and has fall profits and a decrease thee pocies. b. changes in the economic policy If a new Government is appointed, they will announce new economic policies. and these policies may sometimees porno Donate be seen as a boon to the business and sometimes not. This Change in the economic policy may lead to a change in the rate of inflation and the interest rates which in turn

may cause a change in the stock y Value of the cuskena If the value of the curre increases, the people may have to a bay more to buy the goods nothin гарахаар byte h (ЖКА 6 Курсов чекали This will also increase the profits out of exports. But the increase in the value of currency may decrease sales which can lead to lower shockr pocies. When the price of the curreny falls, the goods will become more cheaper for the people to buy and this will increase the sales and also the stock poices.