ve never understood and always puzzled about something extremely basic and indamental about how the stock market works. ccording to my understanding, a firm issues a certain number of shares, and the value those shares is determined by supply and demand. However, it appears that I, and nybody else, can purchase or sell any number of shares at the present stock price at ny time. So, what is the mechanism that influences the price of a stock? I check at the stock price of business X and find that it is selling for $100 a share, I, like nyone else, can pick whether to buy one share for $100 or one million shares for $100. o, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 per hare? The stock price does not appear to move up unless all available shares have beer urchased, nor does it appear to move down unless there are persons prepared to sell hares for less than the market asking price at any particular time.
ve never understood and always puzzled about something extremely basic and indamental about how the stock market works. ccording to my understanding, a firm issues a certain number of shares, and the value those shares is determined by supply and demand. However, it appears that I, and nybody else, can purchase or sell any number of shares at the present stock price at ny time. So, what is the mechanism that influences the price of a stock? I check at the stock price of business X and find that it is selling for $100 a share, I, like nyone else, can pick whether to buy one share for $100 or one million shares for $100. o, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 per hare? The stock price does not appear to move up unless all available shares have beer urchased, nor does it appear to move down unless there are persons prepared to sell hares for less than the market asking price at any particular time.
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 28P
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![Question: I have a question about the stock market.
I've never understood and always puzzled about something extremely basic and
fundamental about how the stock market works.
According to my understanding, a firm issues a certain number of shares, and the value
of those shares is determined by supply and demand. However, it appears that I, and
anybody else, can purchase or sell any number of shares at the present stock price at
any time. So, what is the mechanism that influences the price of a stock?
If I check at the stock price of business X and find that it is selling for $100 a share, I, like
anyone else, can pick whether to buy one share for $100 or one million shares for $100.
So, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 per
share? The stock price does not appear to move up unless all available shares have been
purchased, nor does it appear to move down unless there are persons prepared to sell
shares for less than the market asking price at any particular time.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdee4e8f1-e3d4-456d-b643-bead27ba8b4d%2Ff109ac93-bb9c-4b1e-a143-0fccfe915a5f%2Fqy93q4_processed.png&w=3840&q=75)
Transcribed Image Text:Question: I have a question about the stock market.
I've never understood and always puzzled about something extremely basic and
fundamental about how the stock market works.
According to my understanding, a firm issues a certain number of shares, and the value
of those shares is determined by supply and demand. However, it appears that I, and
anybody else, can purchase or sell any number of shares at the present stock price at
any time. So, what is the mechanism that influences the price of a stock?
If I check at the stock price of business X and find that it is selling for $100 a share, I, like
anyone else, can pick whether to buy one share for $100 or one million shares for $100.
So, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 per
share? The stock price does not appear to move up unless all available shares have been
purchased, nor does it appear to move down unless there are persons prepared to sell
shares for less than the market asking price at any particular time.
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