Question

In: Economics

Stock exchange 1) How can a company's reputation positively or negatively impact share prices? 2) What...

Stock exchange

1) How can a company's reputation positively or negatively impact share prices?

2) What are securities?

3) Why do companies offer portions of their company to the public?

4) Why is the stock market seen as unpredictable?

Solutions

Expert Solution

1)Positively reputed company can sell their share at high price and also at premium

And a negative image company sell their share at low price, and also on discount.

2)Securities are financial negotiable instruments issued by a government orcompany that give ownership rights, debt rights, or rights to buy, sell, or trade option.

3)Public going refers to private company.

initial public offering (IPO), thus becoming a publicly traded  and owned entity. Businesses usually public going to raise capital in hopes of expanding .

Reason companies going to public

Increase cash and liquidity

Better credibility and brand strength

Increase market value

Attract personnel

4)because the stock value is essentially, a function of the amount of dividends it can be expected to pay in the future. Therefore, at any given Time point, the current price of a stock market reflects the sum total of the investment community’s expectations about the future company 'sividends.

If the market’s expectations for the company’s dividends turned out to be precisely true, the stock valye should not change over time.

Rahul Sunny answered 2 years ago
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