Answer :
Answer:
Demand and supply of a good or service influences its price and common stock is no different. If more people are demanding for a stock and yet the supply remains constant, the price of the stock will go up because people will be willing to pay more to acquire the stock as the stock is more scarce.
The same goes for supply, if there is a higher supply than demand, the prices will reduce because people will only be willing to pay less now that the stock seems to be in abundance.
Other factors that affect stock prices include;
- Market Sentiments - The way the market feels about a particular stock will determine its price. If they feel optimistic, price is higher. Pessimistic, price is lower.
- Investor Confidence - If investors are more confident in a company, the higher the stock price. The reverse is true.
- Economic Stability - An unstable economy will lead to fluctuations in the stock market which will indicate higher risk thereby forcing the price of stock lower.