Other - Business & Finance. What Factors Determine The Value Of Stock? What Is The Most Important Factor And Why?
Other - Business & Finance. What Factors Determine The Value Of Stock? What Is The Most Important Factor And Why? People Buy Stock To Make Money. Pe
Other Business Finance : What Factors Determine The Value Of Stock What Is The Most Important Factor And Why
What factors determine the value of stock? What is the most important factor and why? ~~~ joel_morris1 ~~~
Best Answer To Other Business Finance Question
The value of a company is the present value of all future predicted cash flows. Therefore, anything that can affect the predicted future income of the company will affect price. If a new technology that will lower costs comes out from the company, the price will go up as that will cause it to have less expenses. If something happens to the CEO and he is caught for doing something illegal, that will lower public opinion which will lower how much they sell.... making the price go down.
All Answers To Other Business Finance Questions
Answer 1public demand
Answer 2People buy stock to make money. People make money on stock when it's value goes up (generally speaking). So the thing that makes a stock valuable is it's percieved potential to go up in value in the future.
Answer 3The value of a company is the present value of all future predicted cash flows. Therefore, anything that can affect the predicted future income of the company will affect price. If a new technology that will lower costs comes out from the company, the price will go up as that will cause it to have less expenses. If something happens to the CEO and he is caught for doing something illegal, that will lower public opinion which will lower how much they sell.... making the price go down.
Answer 4many factors affect perceived value, trading volume, price to earning ratios, dividends, earnings reports. I think the most important factor in the short term is news. News either good or bad often increases trading volume and moves stock price. In the long term you definetely want real earnings and profitablility. just my opinion
Answer 5Jaimestar is right. The stock value of a company is based on the perception that people have about that company. If they think it's a good deal, the stock price will rise... if they don't think so, expect them to go down. That perception is supposed to be based on the company benefits, actives, etc. But we've seen many huge mistakes in that theory (recently: ENRON in the USA, Deutsche Telekom in Germany, Terra Networks in Spain).
Answer 6Well, there are mainly 2 factors that affect the price of the stock: Systematic and Non systematic Risk. Systematic risk is that risk that has to do with state the economy is, it doesn´t depend on the characteristics of the stock. It is a systematic risk because there is pretty much nothing you can do about it. There is no way of controlling it or predicting it. It is also known as non-diversified risk, because there is no way to diversify risk on that stock because of its correlation with the rest of the stock market. The Unsystematic risk us the risk asosiated with the specific characteristics of the firm that stock represents: capable administration, financial solvency, financial indicatorors, comparisons to its competitors, industry, etc. This can be controlled. Management and investors do have a saying in this risk. Is up to them to do agood job for the risk to be minimized.
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