Question

What three factors influence the value of common​ stock? Briefly describe each.

Answer 1

Answrer - The Three factors affecting the Value of Stock are

1- Supply and Demand

2- Company Financial Performance.

3- Broad Economic Trends

1- Supply and Demand

Stocks are bought and sold on an open market using a bid-ask system. The bid price is the highest price that buyers are willing to pay for a stock and the ask price is the lowest price at which sellers will give up their shares. If there are a lot more buyers than sellers for a stock, those ask prices will be taken out, driving the share price higher.

2- Compnay Financial Performance

When stocks earn more money they become more valuable to investors. This is particularly true when a company earns significantly more than the investor expected. For example if a company is expected to earn 10 cents per share and they instead report a profit of 50 cents per share, the company will be much more in demand.

3. Broad EconomicTrends

Stocks are affected by macroeconomic factors such as the performance of the economy as a whole. For most companies no matter how well-run they are it's harder to make money if the economy is going through a recession, defined as a period of economic regression