Which factors can affect a stock’s price? Check all that apply.

Which factors can affect a stock’s price? Check all that apply.

1. Market performance
2. The company’s financial health
3. The quantity of products produced
4. Location of the company
5. The economy

Answer: The correct options are 1, 2 and 3.

All these three factors are relevant in the context of defining a stock’s price. Market performance on the other hand means the movement of the trends and feelings of the broadly interpreted stock exchange. For instance, in a bull market, most of the stocks tend to go up while in a bear market, most of them go down. Company financial position is profound as this dictates the strength of investors’ confidence in a business venture. Elements such as operating revenues, net income margins, balance sheet debt, and operating cash flows can cause a shift in a stock’s price. For example, if a firm declares a superior earning per share for a specific quarter or period in a way that trounces the expectations of existing analysts, then the company’s share prices are also expected to go up. External factors such as GNP, inflation and employment rates of the economy over a period influence the demand for stocks in the market and the overall performances of the companies. For instance, during a recession period, all these shares are likely to fall because people expect decreased buying and thus, less profits for businesses.

Concerning self-generated revenues, the number of products produced (option 3) can have a relation with a company’s financial performance and therefore its stock price but it does not apply mostly in service industries. Option 4 is that there might be some effects of the location of the company upon the stock price, but common knowledge is that it normally will not address a significant impact on the stock price. These factors are not as relevant in general compared to the market indexes, performance of the companies, and stock market conditions which remain significant drivers for the stock prices, irrespective of the industry type or the magnitude of operational size.