Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 21, Problem 1P
To determine
To explain:
The reasons for firms do not want to issue new shares of stock when consumers or businesses are negative about the economic conditions.
Expert Solution & Answer
Explanation of Solution
The share prices are likely to fall when consumers or businesses are pessimistic about economic conditions. So,if there is a situation where consumers or businessmen are pessimistic, the firms should issue a larger number of stocks to raise some funds. Likewise, these firms are apt to spend in new capital or new expenditure when economic conditions are not in support of them.
Economics Concept Introduction
Stock:
The ownership on a company's assets and earnings in form of share is known as stock. The person having share can claim ownership for that part.
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