The relationship between the value and the price of a stock suggests that
A. the equilibrium price of a stock strikes a balance between those who think the stock is worth more and those who think the stock it's worth less at the current price.
B. it is the stock market's best guess regarding the expected value of the company's future profits.
C. stocks are overvalued.
D. both A and B are true.
Ans: D. both A and B are true.
You might also like to view...
If a major league baseball player would be willing to work for $500,000 per year and is currently being paid $1,200,000 per year, the opportunity cost of his decision to play baseball is
A) $500,000. B) $1,200,000. C) $1,700,000. D) $700,000.
Based on price setting behavior, which of the following will cause a reduction in the price level?
A) an increase in productivity B) a reduction in the nominal wage C) a reduction in the markup D) all of the above E) none of the above