The price of a stock depends on the market forces of supply and demand. With companies issuing only a limited number of shares, price is determined by demand.
An increase in demand will raise the price whereas a decrease in demand will lower the price. Normally the demand for a particular stock depends on expectations regarding the profits of the corporation that issued the stock.
The more optimistic these expectations are, the greater the demand will be and, therefore, the greater the price of the stock
Thursday, March 5, 2009
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