True or false? An increase in the stock price increases the stock rate of return.

Question:

True or false? An increase in the stock price increases the stock rate of return.

Stock:

The stock is termed as the security of the organization in the market, and it is the available shares in the business organization. The ownership of the organization is provided by the entity of the stocks in the market.

Answer and Explanation: 1

The correct answer is False.

The demand is decreased for the stock among the consumers when the stock price increases in the market. It leads to a reduction in the rate of return. Thus when the stock price increases, the stock rate of returns tends to fall in the market.


Learn more about this topic:

Loading...
Stocks: Understanding Investment Performance

from

Chapter 8 / Lesson 6
5.1K

Many large companies around the world are owned by the public in the form of stocks. Watch this video lesson to learn how stockholders earn money when the company does well.


Related to this Question

Explore our homework questions and answers library